Circular 7/2020 — Modifications to Circular 9/2014, Monetary Regulation Deposits

Wednesday, April 1, 2020 OFFICIAL GAZETTE 1 BANCO DE MEXICO CIRCULAR 7/2020 directed to Credit Institutions, regarding Modifications to Circular 9/2014, Monetary Regulation Deposits. At the margin a logo, which says: Bank of Mexico.- "2020, Year of Leona Vicario, Meritorious Mother of the Fatherland". CIRCULAR 7/2020 TO CREDIT INSTITUTIONS: SUBJECT: MODIFICATIONS TO CIRCULAR 9/2014, MONETARY REGULATION DEPOSITS The Bank of Mexico, with the object of promoting the sound development of the financial system, considers it convenient to reduce the total amount of monetary regulation deposits through which it regulates the excess liquidity in the money market, in order for credit institutions to have additional resources to strengthen the continuity of their active operations, while maintaining adequate implementation of monetary policy. For the above, based on articles 28, paragraphs sixth and seventh, of the Political Constitution of the United Mexican States, 14, 24 and 28, of the Bank of Mexico Law, 22 of the Law for Transparency and Ordering of Financial Services, 4, first paragraph, 8, paragraphs fourth and eighth, 10, first paragraph, 12, first paragraph, in relation to 19 Bis, fraction V, 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 and the General Legal Directorate, respectively, as well as Second, fractions VI and X, of the Agreement on the Attachment of Administrative Units of the Bank of Mexico, has resolved to modify the definition of "Development Banking Institutions" in numeral 1, and add a numeral 3.1 Ter, to the "Rules applicable to Monetary Regulation Deposits", contained in Circular 9/2014, to remain in the following terms: RULES APPLICABLE TO MONETARY REGULATION DEPOSITS

1. DEFINITIONS ... "Development Banking Institutions: the National Foreign Trade Bank, S.N.C., Development Banking Institution; the National Bank of the Army, Air Force and Navy, S.N.C., Development Banking Institution; the Bienestar Bank, S.N.C., Development Banking Institution; to National Financiera, S.N.C., Development Banking Institution; to the Federal Mortgage Society, S.N.C., Development Banking Institution, and to the National Bank of Public Works and Services, S.N.C., Development Banking Institution." ... "3.1 Ter Adjusted Amount The total amount of Monetary Regulation Deposits that Credit Institutions maintain at the Bank on April 1, 2020 will be reduced on that same date by FIFTY BILLION PESOS 00/100 M.N. Consequently, the aggregate balance of the principal amount of said Monetary Regulation Deposits resulting from the reduction made on the date indicated above, will amount to TWO HUNDRED SIXTY-NINE MILLION NINE HUNDRED NINETY-THREE MILLION FIFTY-ONE THOUSAND TWO HUNDRED FIFTY-FIVE PESOS 92/100 M.N. For the purposes of the provisions in the previous paragraph, on April 1, 2020, at the opening of operations of SIAC-BANXICO, the Bank will make the necessary credits in the Single Account maintained for each Credit Institution, for the amount resulting from distributing, pro rata, among all Development Banking Institutions, the amount of FIFTEEN BILLION PESOS 00/100 M.N., as well as the amount resulting from distributing, pro rata, among all Multiple Banking Institutions, the amount of THIRTY-FIVE BILLION PESOS 00/100 M.N.. Likewise, the Bank, on the same date, will credit the amount for the interest that accrues on the amounts of Monetary Regulation Deposits that have been returned as per the above and that have been maintained during the last interest period. The interest that accrues during this last period will be calculated applying the rate resulting from the formula specified in these Rules, from the beginning of said interest period, that is, from March 19, 2020 and until March 31, 2020. Additionally, interest will be recalculated on the Monetary Regulation Deposit that remains valid after the return, corresponding to the period between March 19 and April 15, 2020. In accordance with the above, the amount of the Monetary Regulation Deposit that corresponds to each Credit Institution once the distribution referred to in this numeral is carried out, as well as the amount to be credited to it as a consequence, will be that which the Bank has informed them in writing, through electronic means, on April 1, 2020. Without prejudice to the above, each Credit Institution must send a representative, no later than June 1, 2020, to the Directorate of Support for Bank Operations, located at Avenida Cinco de Mayo, number 6, first floor, building Condesa, Centro Neighborhood, Mexico City, C.P. 06000, with telephone number 55-5227-8854, in order to receive the original version of the communication that corresponds to it. Credit Institutions must inform the Bank of the destination they have given to the resources that this has credited in the respective Single Account as provided in this numeral. For these purposes, on September 7, 2020, each Credit Institution will present to the Bank a report describing the amount of credit to the non-banking private sector corresponding to the active operations that it has carried out with persons from said sector in the period between March 31 and August 31, 2020, including the principal amounts of said operations that such Credit Institutions have granted to those persons, and in the case of a Development Banking Institution, it will also include the financing granted to financial intermediaries directly or through the guarantee service, in accordance with its purpose established in its respective organic law. The corresponding Credit Institution will present said report through the Electronic Attention Module referred to in the respective rules issued by the Bank through Circular 13/2012, published in the Official Gazette of the Federation on September 17, 2012, which must contain the electronic signature of the general director of the corresponding Credit Institution. On November 3, 2020, the Bank will adjust the amount of Monetary Regulation Deposits that corresponds to each Credit Institution, as follows: a) Based on the information presented by Credit Institutions according to the fifth paragraph of this numeral, the Bank will calculate a reference amount equivalent to the percentage of participation corresponding to each Credit Institution with respect to the total amount equivalent to the change in credit to the non-banking private sector in the period indicated in said paragraph. b) That Credit Institution to which a participation percentage lower than that results from dividing the amount credited to it according to the second paragraph of this numeral by the total amount of FIFTEEN BILLION PESOS 00/100 M.N. or THIRTY-FIVE BILLION PESOS 00/100 M.N., depending on whether it is a Development Banking Institution or a

Wednesday, April 1, 2020 OFFICIAL GAZETTE 3 a Multiple Banking Institution, must increase its Monetary Regulation Deposit by the equivalent amount of multiplying the differential corresponding to it by the total amount referred to of FIFTEEN BILLION or THIRTY-FIVE BILLION PESOS 00/100 M.N. applicable to it. c) That Credit Institution to which a participation percentage higher than that results from dividing the amount credited to it according to the second paragraph of this numeral by the total amount of FIFTEEN BILLION PESOS 00/100 M.N. or THIRTY-FIVE BILLION PESOS 00/100 M.N., depending on whether it is a Development Banking Institution or a Multiple Banking Institution, must reduce its Monetary Regulation Deposit by the amount equivalent to multiplying the differential corresponding to it by the total amount referred to of FIFTEEN BILLION OR THIRTY-FIVE BILLION PESOS 00/100 M.N. applicable to it. In the event that the change in credit to the non-banking private sector provided for in subsection a) above entails a generalized decrease in this type of credit granted by Multiple Banking Institutions or by Development Banking Institutions as described in the fifth paragraph of this numeral, the Bank may review the methodology it must apply to determine the adjustment to the amount of Monetary Regulation Deposits that corresponds to each Credit Institution, in substitution of that described in subsections b) and c) above. In this case, the Bank will publish the methodology that results in accordance with the above. For the purposes of the provisions in the sixth paragraph of this numeral, on November 3, 2020, at the opening of operations of SIAC-BANXICO, the Bank will make the necessary credits or charges in the Single Account maintained for each Credit Institution, for the amount resulting from the calculation performed according to subsection b) or c) above. Likewise, regarding the amounts that the Bank must credit, on the same date, it will credit the amount for the interest that accrues on the amounts of Monetary Regulation Deposits that have been returned as per the above and that have been maintained during the last interest period. The interest that accrues during this last period will be calculated applying the rate resulting from the formula specified in these Rules, from the beginning of said interest period, that is, from October 29, 2020 and until November 2, 2020. Additionally, interest will be recalculated on the Monetary Regulation Deposit that remains valid after the return, corresponding to the period between October 29, 2020 and November 25, 2020. In accordance with the provisions of the sixth paragraph of this numeral, the Bank will inform in writing, through electronic means, no later than October 29, 2020, to each Credit Institution the amount of the Monetary Regulation Deposit that corresponds to each Credit Institution once the credit or charge referred to in the seventh paragraph of this numeral is carried out, as well as the amount corresponding to said credit or charge. Without prejudice to the above, each Credit Institution must send a representative, no later than November 30, 2020, to the Directorate of Support for Bank Operations of the Bank, located at Avenida Cinco de Mayo, number 6, first floor, building Condesa, Neighborhood Centro, Mexico City, C.P. 06000, with telephone number 55-5227-8854, in order to receive the original version of the communication that corresponds to it."

4 OFFICIAL GAZETTE Wednesday, April 1, 2020 TRANSITORY UNIQUE. This Circular 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.- Rubric.- The General Legal Director, Luis Urrutia Corral.- Rubric. For any queries 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.