Circular A 1096: Modifications to Rules on Deposits, Minimum Cash, and Financial Assets

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
COMMUNICATION "A" 1096 14/10/87
TO FINANCIAL ENTITIES:
Ref.: CIRCULAR LIQUIDITY AND SOLVENCY - LISOL - 1 -
21. PASSIVE OPERATIONS - OPASI - 1 - 96
and MONETARY REGULATIONS - REMON - 1

• 364. Modifications to the rules on deposits, minimum cash, and financial assets

We address you to inform you that this Institution adopted the following resolution:

“ 1. It is ordered that, from 15.10.87, financial entities not included in Annex V to Communication “A” 865 may capture deposits in common and special savings accounts and transferable and non-transferable time deposits, non-adjustable and adjustable by financial index, at the interest rate that they freely agree with their clients.

2. It is established that, from 15.10.87, time deposits adjustable at medium term and by
   financial index shall be established for terms no less than 180 days.

3. It is ordered that, from 15.10.87, entities must cease capturing time deposits
   transferable non-transferable adjustable with US dollar clause, as referred to in Communication “A” 598.

4. Fix, from 15.10.87, for entities not included in Annex V to Communication
   “A” 865, the following minimum cash requirements on deposits and other obligations in australs subject to fractional reserve:

Concept Rate

• in % -
• Savings account
• common 25
• special 1, 5
• Time deposits, passive swaps, and swaps between third parties
• from 7 to 29 days 3
• from 30 to 89 days 1, 5
• from 90 days or more 0
• “Acceptances” 3
• Current account and other deposits and obligations at sight and at term 88, 5

These reserves shall not be subject to compensation.

• 2 -

5. It is ordered that financial entities not included in Annex V to Communication “A”
   865 must constitute, with value as of 15.10.87, a special deposit and, from that date, a financial asset, not countable for the integration of minimum cash, with adjustment to the provisions contained in Annexes I and II, respectively.

6. Apply to the constitution of the special deposit referred to in point 5., with value as of 15.10.87,
   the balances (capitals and adjustments) as of 14.10.87 of the unavailable deposits (Communication “A” 617) and special “at unregulated rate” (Communication “A” 925), which shall be countable for the integration of minimum cash from the first of those dates.

7. Establish that, from November 1987, the proportions referred to in point 1.1. of
   Communication “A” 924 (text according to Communication “A” 950) shall be 70% for distant offices up to 50 km from the Federal Capital or regional treasuries and 55% for those located at greater distances.

8. Substitute, from 15.10.87, point 1.1. of Chapter I of Circular - LISOL - 1 (text according to
   Communication “A” 990) with the following:

“1.1. Capture Limit
Daily balances of deposits and other obligations in national and foreign currencies cannot exceed, at any time, 15 times the computable net worth of the last day of the month prior to the one in question.”

9. Repeal the provisions on:

9.1. Operations of the regulated-rate segment (Communication “A” 617).
The Central Bank will transfer to the current accounts of financial entities the balances as of 14.10.87 registered in the special accounts of the financial asset due to the growth of savings and time deposits (Communication “A” 641).

9.2. Quantitative regulation of the credit portfolio at regulated rate (Communication “A” 899).

9.3. Deductions of adjustments and interests of the Consolidated Loan (Communication “A” 153 and
complementary).

9.4. Time deposits transferable non-transferable at unregulated rate (Annex I to Communication “A” 613).

9.5. Operational quotas for time deposits transferable non-transferable at unregulated rate and
“acceptances” (points 4. and 6. of Communication “A” 925, Communication “A” 931 and points 10. of Communications “A” 998 and 1033).

9.6. Minimum amounts and holders of “acceptances” (points 1.1. and 1.5. of Communication “A”
925, Communication “A” 930, points 1.1. and 2. of Communication “A” 998 and points 1. and 2. of Communication “A” 1033).

B.C.R.A. COMMUNICATION "A" 1096 14/10/87
The rules cited in point 9.2. will cease to govern with effect as of 1.10.87, those mentioned in point 9.3. from 1.11.87, and the remaining ones from 15.10.87.”

The reports for the purposes of making fund movements in the special account of the financial asset referred to in point 5 of the preceding resolution, the provisions disseminated through Communication “A” 641 will apply.

In forms 4027 and 4028 to be submitted to the Treasury Department, or in case of “telex”, the following data will be recorded:

• Financial Asset - Communication “A” 1096.
• Special account number: the corresponding to “Special Deposit - Communication “A” 925
• Unavailable”, replacing the first two digits with the number 70.
• Operation code: 330 (deposit) or 331 (withdrawal). For automatic transfers to current account the Central Bank will use code 332.

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Alfredo A. Besio
Manager of Standards for
Financial Entities
Julio A. Piekarz
Deputy General Manager

ANNEXES

B.C.R.A. SPECIAL DEPOSIT “COMMUNICATION "A" 1096” Annex I to Com. “A” 1096

1. Requirement
   It will be the result of the following algebraic sum:
   E + B + DI + DE - A

Where
E: positive or negative result of the algebraic sum of the differences between the requirements of minimum cash in force until 14.10.87 and those resulting from applying the reserves established from 15.10.87, on the monthly averages of daily balances of deposits in common and special savings and time deposits at regulated rate corresponding to September 1987 multiplied by 1.10, calculated independently for each type of deposit according to the reserves fixed. B: requirement for integration of the financial asset due to the growth of deposits in savings and time deposits, including the effect of the application of the rules on quantitative regulation of the credit portfolio at regulated rate, corresponding to September 1987, multiplied by the coefficient 1.12. DI: unavailable deposit (Communication “A” 617), by capital and adjustments accrued as of 14.10.87, net of the temporary releases referred to in Communication “A” 813. DE: special deposit “at unregulated rate” (Communication “A” 925), by capital and adjustments accrued as of 14.10.87. A: 50% of the monthly average of daily balances of common savings deposits of September 1987 multiplied by 1.10.

2. Remuneration
   The monthly average of daily balances registered in the special deposit account will be adjusted by the variation of an index elaborated based on the rate resulting from applying the following methodology:

Where:
a_l: effective monthly basic interest rate of 30 days, expressed as a fraction.

i*j: effective monthly passive interest rate, as a fraction, published by the Central Bank of the Argentine Republic, where j varies between the (p - 1) day prior to the first day of the current month and the last day of that same month. For each day, the interest rate corresponding to the second immediate preceding business day will be taken. p: theoretical average term of deposits. It is established as 16 days. d_j: number of calendar days of validity in month t of a theoretical time deposit of p days, established on day j. n: number of days of the current month plus (p - 1).

Where:
i*(k): rate of variation of the index to update the special deposit. m: number of calendar days of the current month. k: value periodically fixed by the Central Bank. Initially it will be equal to 1.005.

With effect as of the first day of the month following the one in question, adjustments of the special deposit will be credited to the current account or accumulated in the respective special account, according to the proportions periodically determined. At minimum, 15% of the adjustments accrued monthly will be credited to the current account.

To calculate the adjustment corresponding to October 1987 of the special deposit, the methodology established to remunerate the special deposit “at unregulated rate” (Communication “A” 925) will be taken into account.

3. Transferability
   Transfers between entities of the balances invested in the special deposit account will be admitted to be applied to another account of the same nature, up to A 10 million or 15% of the requirement, whichever is greater.

4. Allocation
   The balances of the special deposit subject to transfer may also be affected as collateral for inter-financial loans.

5. Integration
   The special deposit will be effected with adjustment according to the following schedule:

Integration minimum of the requirement Maturity 50% 23.10.87 100% 30.10.87

The amounts pending to be effected will be deducted from the integration of minimum cash according to the procedure provided normatively for operations with value date.

6. Release
   It will be releasable in the amount equivalent to the cancellation installments (capital, adjustments, and interests) of the Consolidated Loan when they become due, or in the lesser amount resulting from applying to each installment the proportion that, with respect to the balance as of 1.10.87 of the Consolidated Loan, represents the balance as of that date of the unavailable deposit - Communication “A” 617, net of the temporary releases referred to in Communication “A” 813 and those resulting from the application of what is provided in point 3 of Annex II to Communication “A” 617.

B.C.R.A. FINANCIAL ASSET “COMMUNICATION "A" 1096” Annex II to Com. “A” 1096

1. Requirement
   It will be equivalent to 50% of the monthly average of daily balances of common savings deposits registered in the corresponding month.

2. Remuneration
   The rate of variation determined in the corresponding month will be applied to establish the index to update the special deposit - Communication “A” 1096 (point 2. of Annex I).

Interest will be calculated on the average deposited balance and will be credited, at the option of the entities, to the current account or to the special account of the financial asset, with value as of the first day of the month following the one in question.

3. Integration
   It will be verified according to the monthly average of daily balances of the deposit account.

Deficiencies will be subject to a charge equivalent to that established for minimum cash deficiencies.

4. Coverage of debtor balances in current account.
   The Central Bank will transfer to the entities' current accounts the funds deposited in the financial asset accounts to the extent necessary to cover any eventual debtor balances registered in those.