Circular Letter No. 3850 — Details Accounting Items for Calculating the Simplified Reference Equity (PRS5)

The Head of the Prudential and Exchange Regulation Department (Dereg), acting in substitution, using the powers conferred upon them by Article 23, item I, letter “a”; and Article 118, item I, letter “a” of the Internal Regulations of the Central Bank of Brazil, annexed to Ordinance No. 95,818 of December 4, 2017, and considering the provisions of Article 11, sole paragraph, of Resolution No. 4,606 of October 19, 2017,

R E S O L V E S:

Article 1. The calculation of Simplified Reference Equity (PRS5), referred to in Article 8 of Resolution No. 4,606 of December 19, 2017, must be performed, in accordance with the Accounting Plan of Financial System Institutions (Cosif), with the following components:

I - social capital, which corresponds to the values of account 6.1.1.00.00-4 - Social Capital;

II - capital, revaluation, and profit reserves, which correspond to the sum of the values of the accounts:

a) 6.1.3.00.00-0 - Capital Reserves;

b) 6.1.4.00.00-3 - Revaluation Reserves;

c) 6.1.5.00.00-6 - Profit Reserves;

III - unrealized gains resulting from asset valuation adjustments, which correspond to the positive values of account 6.1.6.00.00-9 - Asset Valuation Adjustments (Account value, if positive, or zero otherwise);

IV - accumulated surpluses or profits, which correspond to the positive values of accounts 6.1.7.00.00-2 - Surpluses or Accumulated Losses and 6.1.8.00.00-5 - Profits or Accumulated Losses;

V - credit income accounts, which correspond to the values of account 7.0.0.00.00-9 - Credit Income Accounts;

VI - deposit in a linked account to cover capital deficiency, which corresponds to the values of account 4.9.3.55.00-8 - deposit for guarantee of required equity;

VII - unrealized losses resulting from asset valuation adjustments, which correspond to the negative values of account 6.1.6.00.00-9 - Asset Valuation Adjustments (Account value, if negative, or zero otherwise);

VIII - shares or any other instruments of own issuance, authorized to compose the PRS5, acquired directly or indirectly, which correspond to the values of account 6.1.9.00.00-8 - (-) Treasury Shares;

IX - accumulated losses or deficits, which correspond to the negative values of accounts 6.1.7.00.00-2 - Surpluses or Accumulated Losses and 6.1.8.00.00-5 - Profits or Accumulated Losses (Account values, if negative, or zero, otherwise);

X - debit income accounts, which correspond to the values of account 8.0.0.00.00-6 - (-) Debit Income Accounts;

XI - premiums paid on the acquisition of investments based on the expectation of future profitability, net of associated deferred tax liabilities, which correspond to the sum of the values of the accounts:

a) 2.5.2.00.00-5 - Premium on Investment Acquisition, deducted from the value of account 4.9.4.30.20-8 - Provisions for Investment Premiums Based on Expectation of Future Profitability;

b) 2.1.1.20.16-5 - Non-Financial Institutions - Premium Based on Expectation of Future Profitability;

c) 2.1.1.20.18-9 - Non-Financial Institutions - Premium Based on Goodwill, Intangibles, and Other Economic Reasons;

d) 2.1.2.10.12-3 - Authorized to Operate by the Central Bank - Premium Based on Expectation of Future Profitability, deducted from the values of account 2.1.2.99.12-0 - Authorized to Operate by the Central Bank - Premium Based on Expectation of Future Profitability;

e) 2.1.2.10.22-6 - Other Participations - Premium Based on Expectation of Future Profitability, deducted from the values of account 2.1.2.99.22-3 - Other Participations - Premium Based on Expectation of Future Profitability;

f) 2.1.2.10.24-0 - Other Participations - Premium Based on Goodwill, Intangibles, and Other Economic Reasons, deducted from the values of account 2.1.2.99.24-7 - Other Participations - Premium Based on Goodwill, Intangibles, and Other Economic Reasons;

XII - intangible assets, which correspond to the values of account 2.5.1.00.00-2 - Intangible Assets;

XIII - actuarial assets related to defined benefit pension funds, net of associated deferred tax liabilities, to which the financial institution does not have unrestricted access, which correspond to the values of account 1.8.8.82.00-7 - Actuarial Assets Generated by Defined Benefit Pension Funds, deducted from the values of account 4.9.4.30.30-1 - Provisions for Actuarial Assets of Defined Benefit Pension Funds with Unrestricted Access;

XIV - added value of investments in the social capital of non-financial entities that do not compose the conglomerate, which corresponds to the sum of the values of the accounts:

a) 2.1.1.20.15-8 - Non-Financial Institutions - Equity Method Value;

b) 2.1.1.90.20-5 - Non-Financial Institutions, deducted from the value of account 2.1.1.99.30-9 - Non-Financial Institutions;

c) 2.1.2.10.21-9 - Other Participations - Equity Method Value, deducted from the value of account 2.1.2.99.21-6 - Other Participations - Equity Method Value;

d) 2.1.2.10.55-6 - Other Participations Not Evaluated by the Equity Method;

e) 2.1.2.10.95-8 - Shares of Privatized Companies;

f) 2.1.5.10.00-5 - Shares and Quotas, deducted from the values of account 2.1.5.99.00-2 - PROVISION FOR LOSSES ON SHARES AND QUOTAS;

g) 2.1.5.20.00-2 - Shares of Privatized Companies;

XV - added value of investments in Principal Capital, Supplementary Capital, and Level II instruments, as defined, respectively, in Articles 4, 6, and 7 of Resolution No. 4,192 of March 1, 2013, of an institution that does not compose the conglomerate, which corresponds to the sum of the values of the accounts:

a) 3.0.9.73.12-1 - Investments in Eligible Capital Raising Instruments of the Investee;

b) 3.0.9.73.13-8 - Investments in Eligible Supplementary Capital Raising Instruments of the Investee;

c) 3.0.9.73.14-5 - Investments in Eligible Level II Capital Raising Instruments of the Investee;

XVI - non-controlling interest in the capital of subsidiaries, which corresponds to the value of account 6.4.0.00.00-8 - Non-Controlling Interest;

XVII - tax credits resulting from temporary differences that depend on the generation of future taxable profits or revenues for their realization, which correspond to the sum of the values of the accounts:

a) 3.0.9.84.20-6 - Tax Credits from Temporary Difference - Passive Provisions;

b) 3.0.9.84.30-9 - Tax Credits from Temporary Difference - Marking to Market;

c) 3.0.9.84.40-2 - Tax Credits from Temporary Difference - Others;

XVIII - tax credits resulting from tax losses and the negative base of the Social Contribution on Net Profit and those originating from this contribution relating to assessment periods closed until December 31, 1998, calculated in accordance with Article 8 of Provisional Measure No. 2,158-35 of August 24, 2001, which correspond to the sum of the values of the accounts:

a) 3.0.9.84.60-8 - Tax Credits from Accumulated Tax Loss - Income Tax;

b) 3.0.9.84.70-1 - Tax Credits from Negative Base - CSLL;

c) 3.0.9.84.80-4 - Tax Credits from CSLL Booked at 18% (MP No. 2,158/2001);

d) 3.0.9.84.90-7 - Tax Credits from Accumulated Tax Loss - Others;

XIX - deferred permanent assets, which correspond to the values of account 2.4.0.00.00-0 - Deferred.

Article 2. This Circular Letter enters into force on February 18, 2018.

Jaildo Lima de Oliveira