Circular 4/2020 — Modifies Circular 10/2015

Wednesday, April 1, 2020 OFFICIAL GAZETTE 1 BANK OF MEXICO CIRCULAR 4/2020 directed to Multiple Banking Institutions, regarding Modifications to Circular 10/2015 (Rules Applicable to the Exercise of Financing Granted by the Bank of Mexico to Cover Ordinary Additional Liquidity Needs).

At the margin a logo, which says: Bank of Mexico.- "2020, Year of Leona Vicario, Meritorious Mother of the Fatherland".

CIRCULAR 4/2020 TO MULTIPLE BANKING INSTITUTIONS: SUBJECT: MODIFICATIONS TO CIRCULAR 10/2015 (RULES APPLICABLE TO THE EXERCISE OF FINANCING GRANTED BY THE BANK OF MEXICO TO COVER ORDINARY ADDITIONAL LIQUIDITY NEEDS)

The Bank of Mexico, in order to continue promoting the sound development of the financial system and safeguard its stability, as well as to foster the proper functioning of payment systems, has resolved to modify the rules applicable to the exercise of financing that this Central Institute may grant to multiple banking institutions to cover the ordinary additional liquidity needs they face, in order to facilitate to said institutions the implementation of necessary measures to access said financing.

Therefore, based on articles 28, sixth and seventh paragraphs, of the Political Constitution of the United Mexican States, 7, fractions I, II and X, 8, 14, 15, 16, 24 and 36, of the Bank of Mexico Law, 96 Bis of the Credit Institutions Law, 22 of the Law for Transparency and Ordering of Financial Services, 4, first paragraph, 8, fourth and eighth paragraphs, 10, 12, first paragraph, in relation to 19 Bis, fractions I and V, 14, first paragraph, in relation to 25, fraction VII, and 14 Bis, first paragraph, in relation to 17, fraction I, of the Internal Regulations of the Bank of Mexico, which grant it the authority to issue provisions through the General Directorate of Central Bank Operations, the General Directorate of Financial Stability and the General Legal Directorate, respectively, as well as Second, fractions IV, VI and X, of the Agreement on the Assignment of Administrative Units of the Bank of Mexico, has resolved to modify numerals 2.1, first paragraph, 2.2, first paragraph, in the section "Interest Rate", 2.3, first paragraph, "Premium", sub-section "Interest Rate", and Annex 2, as well as add the term "Electronic Attention Module" to numeral 1, of the "Rules applicable to the exercise of financing granted by the Bank of Mexico to cover ordinary additional liquidity needs", contained in Circular 10/2015, to remain in the following terms:

RULES APPLICABLE TO THE EXERCISE OF FINANCING GRANTED BY THE BANK OF MEXICO TO COVER ORDINARY ADDITIONAL LIQUIDITY NEEDS

1. Definitions. For the purposes of these Rules, it will be understood, in singular or plural: ... "Electronic Attention Module: the system referred to in the respective rules issued by the Bank of Mexico through Circular 13/2012, published in the Official Gazette of the Federation on September 17, 2012." ...

2.1 Conditions for granting financing. "The multiple banking institution interested in obtaining the financing from the Bank of Mexico referred to in these Rules must submit a request in terms of the format attached to these Rules as Annex 1, no later than the Banking Business Day on which it intends to make the disbursement of the corresponding resources, within the hours indicated in the Manual for these effects. Said request must be submitted through the Electronic Attention Module and must bear the electronic signature of the general director of the multiple banking institution or, by means of a written document presented at the address of the Bank of Mexico containing the autograph signature of the general director. Only in the event of the absence of the general director, the request may be signed by a legal representative of said institution who has powers to perform acts of administration and ownership, who must include their electronic signature in the request submitted through the Electronic Attention Module or their autograph signature in the written request, as well as inform, in writing, the general director of the multiple banking institution in question, about the submission of the aforementioned request." ...

2 DIARIO OFICIAL Wednesday, April 1, 2020 general director of the multiple banking institution or, by means of a written document presented at the address of the Bank of Mexico containing the autograph signature of the general director. Only in the event of the absence of the general director, the request may be signed by a legal representative of said institution who has powers to perform acts of administration and ownership, who must include their electronic signature in the request submitted through the Electronic Attention Module or their autograph signature in the written request, as well as inform, in writing, the general director of the multiple banking institution in question, about the submission of the aforementioned request." ...

2.2 Guaranteed credits with monetary regulation deposits or with deposits in Dollars at the Bank of Mexico. "Interest Rate: The equivalent to the result of multiplying the factor of 1.1 (one point one) by the one-day interbank interest rate that the Board of Governors of the Bank of Mexico has determined as the target rate for monetary policy purposes, expressed annually and in percent with rounding to two decimal places, made known on the internet electronic page of the Bank itself and which is in effect at the time of the disbursement of the resources corresponding to the credit or the respective renewal." ...

2.3 Repo operations. Premium: ... "Interest Rate: shall be equivalent to the result of multiplying the factor of 1.1 (one point one) by the one-day interbank interest rate that the Board of Governors of the Bank of Mexico has determined as the target rate for monetary policy purposes, expressed annually and in percent with rounding to two decimal places, made known on the internet electronic page of the Bank itself and which is in effect at the time of the crediting, in favor of the reported, of the resources subject to the repo or the respective renewal of the repo." ...

Annex 2 Payment communication format that Multiple Banking Institutions must present to the Bank of Mexico Mexico City, ______________________. General Directorate of Central Bank Operations Bank of Mexico Present,

Through this channel, I inform you that the [day]_ of [month]_ of [year] (FULL NAME OF THE MULTIPLE BANKING INSTITUTION, INCLUDING, IF APPLICABLE, THE FINANCIAL GROUP TO WHICH IT BELONGS), will make the payment of the financing granted to it by the Bank of Mexico in terms of Circular 10/2015 for a principal amount of $ __________________ (amount in letters), plus the interests and, if applicable, corresponding accessories, a partial payment for the amount of $ __________________ (amount in letters), plus the interests and, if applicable, corresponding accessories, for which I authorize and instruct that Central Institute to make the respective charge in the Single Account that it holds for this institution in terms of the contract.

Sincerely, (NAME AND SIGNATURE OF AUTHORIZED OFFICIALS)

TRANSITORY SINGLE. This reform will enter into force on April 1, 2020.

Mexico City, March 25, 2020.- BANK OF MEXICO: The General Director of Central Bank Operations, Gerardo Israel García López.- Initials.- The General Director of Financial Stability, Fabrizio López Gallo Dey.- Initials.- The General Legal Director, Luis Urrutia Corral.- Initials.

Wednesday, April 1, 2020 OFFICIAL GAZETTE 3 For any inquiries regarding the content of this Circular, the Bank of Mexico is at your disposal through the Directorate of Authorizations and Sanctions of Central Bank at telephone (55) 5237-2000 extension 3200.