Circular LISOL 1-1078: Minimum Capital of Financial Entities. Amendments.

"AÑO DE LA DEFENSA DE LA VIDA, LA LIBERTAD Y LA PROPIEDAD" COMUNICACIÓN “A” 8121 31/10/2024 TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1-1078:
Minimum Capital of Financial Entities.
Amendments.
___________________________________________________________________________ We address you to inform you that this Institution adopted the resolution that, in its pertinent part, establishes:

“- Exclude foreign currency financings, which are agreed from the day following the publication of this communication, from the scope of the provisions of point 11.5 of the consolidated text on Minimum Capital of Financial Entities.”

Regarding this matter, we provide you with the pages that, in replacement of those previously provided, should be incorporated into the consolidated text of reference. In this sense, we remind you that on this Institution’s website www.bcra.gob.ar, by accessing “Financial System - LEGAL AND REGULATORY FRAMEWORK - Regulations and summaries - Consolidated texts of general regulations”, the modifications made with text highlighted in special characters (strikethrough and bold) can be found.

We remain at your service.
CENTRAL BANK OF THE ARGENTINE REPUBLIC
Darío C. Stefanelli Marina Ongaro
Chief Manager of Issuance and Normative Applications Deputy General Manager of Financial Regulation

ANNEX

11.1. Acquisitions by financial entities.
For the purposes of determining the consolidated basis computable patrimonial responsibility, the consolidating entity may add the amount recorded in the specific item under Provisions of Liabilities.

11.2. Merger of financial entities.
For the purposes of determining the RPC (Consolidated Basis Patrimonial Responsibility), the amount corresponding to the negative business goodwill recorded in the specific item under Provisions of Liabilities may be added.

11.3. For the purposes of determining the RPC, starting from 01/02/13, instruments of capital that cease to meet the criteria to be considered additional level one capital (CAn1) or supplementary net worth (PNc) will be excluded, as established in Section 8.

For these purposes, while they maintain the conditions under which their inclusion in the RPC was previously admitted, the amount resulting from applying the methodology in force at the end of each month to the book values of the instruments as of that date will be computed. Their recognition as RPC will be limited to 90% of the value thus obtained from that date, with this limit decreasing by 10 percentage points every twelve months. This limit will be applied separately to each instrument – whether computed in CAn1 or in PNc –.

11.4. For the purposes of determining the RPC, financial entities may compute as ordinary level one capital (COn1) the positive difference between the new accounting provision computed according to point 5.5 of IFRS 9 – taking into account, if applicable, the proration methodology provided in Communication “A” 6847 – and the regulatory provision calculated according to the rules on Minimum Provisions for Uncollectible Risk or the accounting provision corresponding to the balance sheet as of 11/30 of the year prior to the first application of the aforementioned point of IFRS 9 – whichever is higher.

11.5. For the purposes of determining the minimum capital requirement for credit risk, the amount resulting from applying the provisions of Section 2. must be multiplied by a factor equal to 4 in the case of financings to clients with agricultural activity that are not Micro, Small and Medium Enterprises (MSMEs) and maintain a stock of their production with a value greater than 5% of their annual harvest capacity, as follows:
– Financings agreed from 18/05/2020 until 31/10/24.
– Financings in pesos that are agreed from 01/11/24.

11.6. National public bonds in pesos with dual currency yield receive the same treatment as securities issued in pesos.

B.C.R.A. MINIMUM CAPITAL OF FINANCIAL ENTITIES
Section 11. Other provisions.
Version: 14a. COMMUNICATION “A” 8121 Validity:
01/11/2024 Page 1

MINIMUM CAPITAL OF FINANCIAL ENTITIES
CONSOLIDATED TEXT SOURCE OF NORM
OBSERVATIONS Section Point Paragraph Com. Cap./
Annex Point Paragraph
8.
8.6. “A” 414
LISOL-1
VI 3.4. According to Com. “A” 1858, 4172, 4631, 4652, 5369 (Annex I), 6260, 6304 and “B” 9186.
8.7. “A” 4652 2. According to Com. “A” 6327.
9.
9.1. “A” 2227 unique 5.2.1. last According to Com. “A” 2649 and 4172.
9.2. “A” 2227 unique 5.1.1.,
5.1.7. and
5.2.2.
According to Com. “A” 2461, 2649, 4172,
5272, 5369 and 5867. last “A” 6723 1. According to Com. “A” 7393.
10.
10.1. “A” 6004 unique According to Com. “A” 6343.
10.2. “A” 6004 unique According to Com. “A” 6343.
10.3. “A” 6004 unique According to Com. “A” 6343.
11.
11.1. “A” 3985 According to Com. “A” 4172.
11.2. “A” 3985 According to Com. “A” 4172.
11.3. “A” 5369 8. According to Com. “A” 5580.
11.4. “A” 6938 12. According to Com. “A” 7007 and 7928.
11.5. “A” 7018 5. According to Com. “A” 8121.
11.6. “A” 7545 1.
12. 1° “A” 7470 2. According to Com. “A” 7524 and 8028.
2° “A” 7470 3. According to Com. “A” 7524 and 8028.