Circular 1388: Modifications to the Additional Benefits Agreement for the Credit Support Program for States and Municipalities

Mexico, D.F., December 18, 1997.

CIRCULAR No. 1388

SUBJECT: ADDITIONAL BENEFITS AGREEMENT FOR THE CREDIT SUPPORT PROGRAM FOR STATES AND MUNICIPALITIES.- Modifications to applicable provisions.

TO MULTIPLE BANKING INSTITUTIONS:

In relation to Circular 1362, which contains provisions regarding benefits for states and municipalities that are debtors of credits denominated in Investment Units (UDIs), established in addition to those provided in the Credit Support Program for States and Municipalities (hereinafter the Program), and due to the signing of the Addendum to the Additional Benefits Agreement for the Credit Support Program for States and Municipalities (hereinafter the Addendum), between the Federal Government, represented by the Secretariat of Finance and Public Credit, and the Association of Banks of Mexico, A.C., this National Banking and Securities Commission, based on articles 99 of the Credit Institutions Law and 4, fractions III and XXXVI of the National Banking and Securities Commission Law, has resolved to modify sections 3.1.5, 3.2.8, and 3.2.9, as well as add sections 2.4 and 2.5 to the aforementioned Circular 1362, as indicated below:

“2.4 Substitution of creditor through legal subrogation.

2.4.1 Substitution of creditor.

States and municipalities, including their decentralized agencies and public companies, that decide to substitute their creditors in accordance with the Addendum, must comply with the following:

2.4.11. Restructure their credits under the Agreement.

2.4.12. 2.4.12. Carry out the substitution of the creditor only once, simultaneously or after the restructuring under the Agreement. In cases of substitution after the restructuring in accordance with the aforementioned Agreement, the creditor substitution must be carried out within the maximum deadline established in accordance with the Addendum.

2.4.2 Support in UDIs for institutions that grant resources for the early amortization of restructured credits in accordance with the Program.

Institutions that grant resources to states and municipalities, including their respective decentralized agencies and public companies, for the early amortization of restructured credits in accordance with the Program, may access an amount equivalent in UDIs equal to that granted for the early settlement of the credit.

2.5 Registration in the Registry of Obligations and Bonds of Federal Entities and Municipalities, of restructured credits in accordance with the Agreement.

For the purposes of registration in the Registry of Obligations and Bonds of Federal Entities and Municipalities maintained by the Secretariat of Finance and Public Credit, the restructurings carried out under the Agreement, including the operations contemplated in the Addendum, will be subject to the regulations applied to the original restructuring under the Program.”

“3.1.5 . . .

. . .

. . .

In the event that institutions receive payment of any credit in accordance with the Addendum, proceedings will be taken in accordance with the terms of this section.”

“3.2.8 . . .

. . .

. . .

In the event that institutions receive payment of any credit in accordance with the Addendum, proceedings will be taken in accordance with the terms of this section.

3.2.9 Amortization of principal and interest of credits.

The principal and interest accrued on restructured credits will be covered through a scheme of equal payments in UDIs, with monthly or quarterly frequency, at the choice of the creditor. The amount of amortizations to be made will be determined by applying the annuity method.”

Respectfully,

NATIONAL BANKING AND SECURITIES COMMISSION

Eduardo Fernández García
President