Circular LISOL 1 - 113. REMON 1 - 724. Minimum liquidity requirements. Exigibility, integration and charges for deficiencies in minimum cash

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
__________________________________________________________________ COMUNICACION " A " 2350 14/07/95 __________________________________________________________________ TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 113.
REMON 1 - 724.
Minimum liquidity requirements.
Exigibility, integration and charges for deficiencies in minimum cash

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

"1. Establish that entities must observe minimum liquidity requirements, in accordance with the following guidelines:

1.1. Concepts included.
All deposits and other obligations arising from financial intermediation, in pesos and in foreign currency, including - by way of illustration - those arising from operations with banks and foreign correspondents, reverse repurchase agreements (pases pasivos), negotiable obligations, and securities deposits (public and private) for the capitals effectively transacted.

Excluded are premiums and accrued, due, or to-be-accrued interest on the aforementioned debts, obligations with the Central Bank, obligations with local financial entities, obligations mentioned in points 1.2.1. to 1.2.5. of Chapter I of Circular REMON - 1, obligations for spot purchases to be settled and forward purchases of securities and foreign currency, and forward sales of securities and foreign currency, whether or not linked to repurchase agreements.

1.2. Calculation.
The minimum liquidity requirements established shall be applied, in accordance with the procedure indicated in the following paragraph, on the monthly average of daily balances of the included concepts registered during the calculation period at the close of operations each day.

To this end, in the case of term operations, the balance corresponding to each of the sections - according to the maturity breakdown to be established - shall be determined daily, taking into account the residual term of said operations, that is, computing the number of days remaining until the maturity of the obligation, counted from each of the days of the month.

The calculation periods shall be as follows:

Position	Requirement and integration
	From the 16th of the previous month to the 15th of the current month.
	From the end of the month from the first to the last day of the month.

Averages are obtained by dividing the sum of the relevant daily balances by the total number of days in the calculation period.

On days where no movement is registered, the balance corresponding to the immediately preceding business day shall be repeated.

1.3. Integration.
The compliance with the integration of liquidity requirements shall be measured on the basis of the monthly average of daily balances registered in the concepts admitted for this effect during the calculation period of the requirements, dividing the sum of said balances by the total number of days of the period. On days where no movement is registered, the balance corresponding to the immediately preceding business day shall be repeated.

1.3.1. Admitted concepts.
1.3.1.1. Reverse repurchase agreement operations for the Central Bank (for the transacted capitals).
1.3.1.2. Account "Liquidity Requirements - Comm. 'A' 2350" opened at Deutsche Bank - New York Branch, in the name and order of the entity.
1.3.1.3. Bonds from central governments of countries members of the Organisation for Economic Co-operation and Development (OECD) that have at least one "A" rating or higher granted by any of the international risk rating agencies according to the list contained in point 6 of Communication "A" 2269.
These must be titles with usual quotation for significant amounts in foreign stock exchanges or markets.
The computation of this integration shall be admitted only if the bonds or certificates representing the investment are kept in custody at Deutsche Bank - New York Branch.

1.3.2. The first calculation period shall be that comprised between 1.8 and 31.8.95.

1.4. Minimum requirements.
From 1.8.95, the requirements arising from applying the following rates shall be observed - except in the cases detailed below -:

Concept	Rates in %
- in current checking accounts, common and deferred payment, in pesos and US dollars	0
- in savings accounts in pesos and foreign currency	0
- Usuras pupilares, special accounts for closed circles and "Unemployment Fund for workers in the construction industry"	0
- other deposits and obligations at sight and immobilized balances in pesos, foreign currency and securities	0
- deposits and other obligations at term, obligations for "acceptances", reverse repurchase agreements of securities and foreign currency, and securities pledges and securities repurchase agreements of securities, in pesos and foreign currency:
- up to 59 days	6
- from 60 to 89 days	2
- from 90 to 179 days	2
- from 180 to 360 days	0
- more than 360 days	0

Regarding the liabilities mentioned below, the minimum liquidity requirements shall be exigible from 1.11.95, according to the following detail:

Concept	Rates in %
- term deposits of securities, obligations at sight and at term with banks and foreign correspondents, and negotiable obligations:
- up to 59 days	6
- from 60 to 89 days	2
- from 90 to 179 days	2
- from 180 to 360 days	0
- more than 360 days	0

1.5. Non-compliance.
The deficiency in the integration of minimum liquidity requirements shall be subject to a charge equivalent to 30% nominal annual, calculated according to the following expression:

c = Dna * 30 / 36500

where c: amount of the charge
Dna: Accumulated net deficiency subject to charge, expressed in numerals

In the event of defects occurring successively, the charge shall be applied to the positive result of the following expression:

Dna = (dt1 + dt2 + dt3 + ...+ dtn) - dac

where:
dtn = rt - it where:
t : fortnight comprised rt: liquidity requirement of sub-period t it: integration of sub-period t dt: deficiency of sub-period t (in case of excess it will be -dt) dac: algebraic sum of the numerals of the fortnights for which a charge was settled up to the calculation period immediately preceding the last one in which a defect is registered.

The provisions contained in points 3.2.2. to 3.2.4. of Chapter V of Circular LISOL - 1 (text according to Communication "A" 2019) shall be applicable. In the event that the procedural norms for its settlement and effectiveness are not available, the charges shall be deposited subject to adjustment within the 12 calendar days following the close of the period to which they correspond.

The repetition of non-compliance for four consecutive times or for six alternating times within a year shall determine the obligation to present a regularization plan, within the 20 calendar days following the close of the period in which any of those circumstances is registered.

Furthermore, from the first day of the month following the month of the non-compliance that determines the obligation to present said plan, the amount of deposits, in pesos, in foreign currency and in securities, shall not exceed the level that in monthly average of daily balances it had reached during the period in which said non-compliance occurs.

The lifting of that restriction shall be subject to the resolution adopted regarding the plan presented.

2. Establish, from 1.8.95, the following minimum cash requirements:

Concept	Rates in %
- in current checking accounts, common checking in pesos and US dollars	30
- in current checking accounts, deferred payment checking	0
- in savings accounts in pesos	30
- other deposits and obligations at sight and at term in pesos	30
- fixed term in pesos:
- from 30 to 59 days	0
- 60 days or more	0
- obligations for "acceptances", reverse repurchase agreements of securities and foreign currency, and securities pledges and securities repurchase agreements of securities:
- from 30 to 59 days	0
- 60 days or more	0
- Usuras pupilares, special accounts for closed circles and "Unemployment Fund for workers in the construction industry"	0
- in savings accounts, other deposits at sight and immobilized balances, in foreign currency (Comm. "A" 1820)	30
- fixed term in foreign currency (Comm. "A" 1820):
- from 30 to 59 days	0
- 60 days or more	0
- Forward purchases of securities and foreign currency, of 30 days or more	0
- Spot purchases to be settled of securities and foreign currency, whatever their term	0
- Negotiable obligations	0

3. Admit that the minimum cash on deposits and other obligations subject to fractional reserve of the unified and foreign currency positions, be integrated in both segments with banknotes and coins and the other complementary integration items admitted to which point 1.3.2. of Chapter I of Circular REMON - 1 (text according to Communication "A" 1943) refers, without exceeding the percentages of the monthly average of daily balances of said items established according to the following schedule:

Positions at %
15.8 and 31.8.95	30
15.9 and 30.9.95	20
15.10 and 31.10.95	10
15.11 and 30.11.95	0

Regarding offices located at a distance of 100 km or more from the Central Bank or the nearest regional treasury, such requirements may be integrated with said concepts for up to 50% of the average of daily balances of those integration items registered in each of those offices.

Consequently, the maximum complementary integration admitted for the entity considered as a whole shall arise from the sum of the amounts resulting from the preceding computation and applying the percentages established in the schedule on the balances registered in offices less than 100 km from the Central Bank or the nearest regional treasury.

4. Fix for the deficiencies in the integration of minimum cash in pesos and foreign currency, for the periods closing on 15.8 and 31.8.95, the charges indicated below:

Deficiency/Requirement Ratio	Charge Rate on the deficiency - in nominal annual % -
Up to 15%	8
More than 15%	18(*)

(*) This rate shall be applied to the amount of the deficiency that exceeds 15% of the requirement. On the first defect tranch, the attenuated rate of 8% shall be applied.

In the event that it corresponds, to establish the aforementioned relationship, the defects of the basic and complementary integrations shall be added, not admitting the compensation of deficiencies of the first of those positions with excesses of the second.

The deviations registered shall be subject to the application of the remaining provisions provided for those situations, in accordance with what is established in points 1.5.1.1. and 1.5.1.2. of Chapter I of Circular REMON - 1 (text according to Communication "A" 2019).

5. Admit excesses in the global net positive position of foreign currency to the extent that they are linked to the integration through deposits in the special account and/or with bonds from foreign countries issued in US dollars (sections 1.3.1.2. and 1.3.1.3. of point 1. of this resolution), regarding the minimum liquidity requirements applicable on liabilities in pesos.

6. Establish that the defect in the application of resources in foreign currency captured with adjustment to the regime of Communication "A" 1820 and complementary ones, shall not generate an equivalent increase in the minimum cash requirement to the extent that it is matched with the integration of the minimum liquidity requirements referred to in sections 1.3.1.2. and 1.3.1.3. of point 1. of this resolution."

We clarify that, regarding the integration of minimum cash positions whose closings will operate on the 15th of each month, during the period August/November 1995, the provisions in point 3. of the resolution transcribed above have effect for the second sub-period of each of those positions. Similar treatment shall apply in relation to the provisions contained in point 2. regarding the positions closing on 15.8.95.

Finally, we point out that for any consultation related to the operation that will be in charge of Deutsche Bank in accordance with the provisions adopted in matter of integration of liquidity requirements, you must communicate with Mr. Alfredo Salamanca of the New York Branch of that entity (tel.: 00-1-212-474-6754; "fax": 00-1-212-474-6787).

We salute you very attentively.

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Juan Carlos Isi Alfredo A. Besio
Submanager of Norms for Manager of Norms for
Financial Entities Financial Entities