Circular LISOL 1 - 114. REMON 1 - 725. CONAU 1 - 178. Minimum Liquidity Requirements. Supplementary Rules

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
__________________________________________________________________ COMUNICACION " A " 2353 01/08/95 __________________________________________________________________ TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 114.
REMON 1 - 725.
CONAU 1 - 178.
Minimum Liquidity Requirements.
Supplementary Rules

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

"1. Substitute, with effect from 1.8.95, point 1.1. of the resolution disseminated by Communication "A" 2350 with the following:
"1.1. Concepts included.
All deposits and other obligations for financial intermediation, in pesos and foreign currency, including - illustratively - those arising from operations with banks and correspondents abroad, passive passes, negotiable obligations, and securities deposits (public and private) for the capitals effectively traded and the unused balances of current account advances formalized. Excluded are premiums and accrued, due, or to accrue interests on the aforementioned debts, obligations with the Central Bank, obligations with local financial entities, obligations with foreign banks for lines destined for financing foreign trade operations, obligations mentioned in points 1.2.1. to 1.2.5. of Chapter I of Circular REMON - 1, obligations for cash purchases to be settled and forward sales of securities and foreign currency, and cash sales to be settled and forward sales of securities and foreign currency, whether or not linked to active passes."

2. Replace, with effect from 1.8.95, the second paragraph of point 1.2. of the resolution disseminated by Communication "A" 2350 with the following:
   "To this end, in the case of term operations, liquidity requirements will arise from applying the established rates - according to the maturity structure set - on the amounts resulting from multiplying the total daily balance of those obligations - recorded in the computation period to which they correspond - by the percentages resulting from the residual maturity structure of the immediate previous position, that is, computing the number of days remaining in that period until the obligation's maturity, counted from each day of said interval."

3. Substitute, with effect from 1.8.95, points 1.3., 1.4. and 1.5. of the resolution disseminated by Communication "A" 2350 with the following:
   "1.3. Integration.
   The compliance with the integration of liquidity requirements will be measured based on the monthly average of daily balances recorded in the concepts admitted for this effect during the computation period of the requirements, dividing the sum of said balances by the total number of days in the period. Days on which no movement is recorded must repeat the balance corresponding to the immediately preceding business day. On no day of the computation period for integration, the sum of the balances of the admitted concepts, recorded at the close of each day, may be less than 50% of the determined requirement. This requirement will be valid with respect to liquidity requirements corresponding to computation periods ending from 15.9.95 inclusive.

1.3.1. Admitted concepts.
1.3.1.1. Passive pass operations for the Central Bank (for the traded capitals).
1.3.1.2. Account "Liquidity Requirements - Com. "A" 2350" opened at Deutsche Bank - New York Branch, in the name and order of the entity.
1.3.1.3. Bonds of central governments of countries members of the Organization for Economic Co-operation and Development (OECD) that have at least one "A" rating or higher granted by one of the international risk assessment agencies according to the list contained in point 6. of Communication "A" 2269.
These must be titles with habitual quotation for significant amounts in exchanges or markets abroad.
The computation will be carried out taking into account the value that arises for each day of the month based on the daily quotation of the titles.
The computation of this integration will 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 computation period for the requirements and integration will be that comprised between 1.8. and 31.8.95.
In that case, for the purposes of the provision in the second paragraph of point 1.2., the residual maturity structure corresponding to the interval 1.7/31.7.95 will be taken into account."

"1.4. Minimum requirements.
From 1.8.95, the requirements arising from applying the following rates must be integrated - except in the cases detailed below -:
Concept Rates in %

• in checking account for common checks and deferred payment, in pesos and US dollars 0
• in savings account in pesos and foreign currency 0
• Pupilar accounts, special accounts for closed circles and "Unemployment Fund for workers in the construction industry" 0
• other deposits and obligations at sight, immobilized balances in pesos, foreign currency, and securities, and unused balances of advances in current account formalized 0
• deposits and other obligations at term, obligations for "acceptances", passive passes of securities and foreign currency, and sureties and stock exchange passes 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
  At the entity's option, with the aim of facilitating the adaptation of information systems, the requirements on fixed-term deposits in pesos and foreign currency of 60 or more days of original term may be observed from 1.9.95.
  With respect to the liabilities mentioned below, the minimum liquidity requirements will be enforceable from 1.11.95, according to the following detail:
  Concept Rates in %
• term deposits of securities, obligations at sight and term with banks and foreign correspondents - except foreign trade obligations -, 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
  For non-banking financial entities, the provisions on integration of minimum liquidity requirements, regardless of the nature of the liabilities, will be valid from 1.11.95."

"1.5. Non-compliance.
"The deficiency in integration of minimum liquidity requirements - including the deficiency of the minimum daily balance - will 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 case of successive defects, the charge will 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 subperiod t it: integration of subperiod t dt: deficiency of subperiod t (in case of excess it will be -dt) dac: algebraic sum of the numerals of the fortnights for which charge was settled until the computation 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) will be applicable. In case of not having the procedural norms for its settlement and effective realization, the charges will be deposited subject to adjustment within the 12 consecutive days following the close of the period to which they correspond. Reiteration of non-compliance for four consecutive times or six alternating times within a year will determine the obligation to present a regularization plan, within the 20 consecutive days following the close of the period in which any of those circumstances is registered. This will constitute an impediment for the expansion of the entity (opening of branches or representation offices abroad), transformation, or participation in other financial entities. Furthermore, from the first day of the month following the month of the non-compliance that determines the obligation to present the said plan, the amount of deposits, in pesos, foreign currency, and securities, may not exceed the level that in monthly average of daily balances was reached during the period in which said non-compliance is verified. The lifting of that restriction will be subject to the resolution adopted with respect to the plan presented."

4. Incorporate, with effect from 1.8.95, as points 1.6. and 1.7. of the resolution disseminated through Communication "A" 2350 the following:
   "1.6. Responsible parties and sanctions.
   The financial entity must inform the Superintendence of Financial and Exchange Entities, before 23.8.95 and subsequently within 10 consecutive days of any change occurring, the names of the responsible parties for the management of the liquidity policy - which involves the adoption of precautions for compliance with the integration of minimum liquidity requirements - (officials and/or manager of the area), the General Manager, and the member of the board of directors or advisor or highest authority in the country in the case of foreign entities to whom the function must be reported.

The aforementioned officials will be fully responsible for verifying that the declared integration corresponds strictly to the definition of the concepts admitted for this effect, that is, that they are not subject, directly or indirectly, to conditions that denature the objective pursued with these requirements (disposal of funds in time and form adequate to face the return of liabilities), due to the existence of counter-documents, formalized or informal commitments, or committed operations that nullify the liquidity of the instruments admitted as integration. The mechanisms or modalities that, in the judgment of the Superintendence of Financial and Exchange Entities, make it presume the existence of undue conditions on the disposal of liquidity will determine the obligation to immediately suspend the involved officials, who together with the financial entity must provide explanations on the matter within the term of 5 business days, counted from the notification of the request. The said Superintendence will rule within 30 business days following the receipt of the defenses. The verification of infractions will determine the application of the following sanctions:

• fine between 5 and 10% of the improperly computed amounts, accumulating the sums of the last 12 months. The financial entity and the mentioned persons will be jointly responsible for the fines imposed.
• disqualification for five to twenty years for the performance of functions in the financial activity by the persons responsible for the liquidity area.
  The sanctions will have immediate execution, without prejudice to the right to appeal granted by Law 21.526."

"1.7. Accounting registration.
Entities must register in off-balance sheet accounts, in the items that will be indicated in due course, the commitments to grant correspondent lines or financings or funds under any modality in favor of other entities abroad."

5. Replace, with effect from 1.8.95, points 5. and 6. of the resolution disseminated by Communication "A" 2350 with the following:
   "5. Admit excesses in the global net positive position of foreign currency to the extent that they are linked to integration through passes with the Central Bank, deposits in the special account and/or with bonds of foreign countries issued in US dollars (sections 1.3.1.1., 1.3.1.2. and 1.3.1.3. of point 3. of this resolution), with respect to the minimum liquidity requirements applicable on liabilities in pesos." "6. Establish that the failure to apply the resources in foreign currency captured with adjustment to the regime of Communication "A" 1820 and complements, will not generate an equivalent increase in the minimum cash requirement to the extent that it is corresponded with the integration with the concepts referred to in sections 1.3.1.2. and 1.3.1.3. of point 3. of this resolution, with respect to the minimum liquidity requirements established on those resources."

6. Establish that they will have 0% weighting, for the purposes of determining minimum capital requirements (Communication "A" 2136), the placements in the account "Liquidity Requirements - Com. "A" 2350" opened at Deutsche Bank - New York Branch and the investments in titles that meet the conditions mentioned in point 1.3.1.3. of the resolution disseminated by Communication "A" 2350.

7. Exclude from the computation for the purposes of the relations established in Annexes I and II to Communication "A" 2140, on risk fragmentation, the balances in the account "Liquidity Requirements - Com. "A" 2350" opened at Deutsche Bank - New York Branch and the investments in titles referred to in point 1.3.1.3. of the resolution disseminated by Communication "A" 2350.

8. Leave without effect what was established in point 4. of the resolution disseminated by Communication "A" 2350, with respect to positions that close from 31.8.95, so that in matters of charges for deficiencies of minimum cash, the provisions contained in point 1.5.1. of Chapter I of Circular REMON - 1 (text according to Communications "A" 2019 and 2042) will be applicable from that computation period."

We point out to you that, according to information supplied to this Institution in its capacity as custodian bank, Deutsche Bank New York will be in a position to receive the custody of the securities referred to in point 1.3.1.3. of the resolution made known by Communication "A" 2350 (text according to this resolution) from the dates indicated for each case as follows:

• securities issued by the Government of the United States of North America: from 1.8.95
• securities issued by the remaining countries members of the Organization for Economic Co-operation and Development (OECD) that meet the required conditions: from 15.9.95

In another order, we put in your knowledge data that are necessary in relation to the compliance with the minimum liquidity requirements through the said entity:

• Name: Deutsche Bank New York, Global Custody Services
• Address: 31 West 52nd. Street, New York, N.Y: 10019
• T.E.: 212-474-6754:
• SWIFT Address: DEUTUS33
• Telex: 429166
• Cable transfer of funds:
  "Federal Reserve Bank NY ABA 026003780 Favor Account DBSCUN 107001870438 for subsequent crediting in (name of the financial entity) At.: Al Salamanca"
• Transfer of securities via "Federal Reserve":
  "Bank of NYC/DBCCFFC (name of the financial entity)"

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Juan Carlos Isi Miguel A. Kiguel
Submanager of Norms Submanager General for Financial Entities Area of Economy and Finance