Circular LISOL 1-152. Increase in Minimum Liquidity Requirements

CENTRAL BANK OF THE ARGENTINE REPUBLIC

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COMMUNICATION "A" 2511 17/01/97

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TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 152.
Increase in minimum liquidity requirements

We address you to forward the pages that should be incorporated into Sections 2 and 4 of the standardized text of the rules on minimum liquidity requirements, due to the provisions disseminated through Communication "A" 2482 and as established in point 1 of Communication "A" 2490, in replacement of those previously provided.

We salute you very respectfully.

CENTRAL BANK OF THE ARGENTINE REPUBLIC
Juan Carlos Isi Alfredo A. Besio
Deputy Manager of Standards Deputy Manager of Standards for Financial Entities for Financial Entities

ANNEX

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I MINIMUM LIQUIDITY REQUIREMENTS I
B.C.R.A.	------	Section 2. Computation.
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The minimum liquidity requirements established shall be applied, according to the procedure indicated in the following paragraphs, on the monthly average of the daily balances of the included concepts registered during the computation period at the close of each day.

To this end, in the case of fixed-term deposits in pesos and foreign currency and other modalities of term investment, the liquidity requirements will arise from applying the established rates -according to the maturity structure set forth- on the amounts resulting from multiplying the total daily balance of these obligations -which are registered in the computation period to which they correspond- by the percentages resulting from the residual maturity structure of the position whose close has been operated on the day prior to the start of the respective computation period, that is considering the number of days remaining in that period until the maturity of the obligation, counted from each of the days of said lapse.

Furthermore, for the mentioned resource collection modalities at term, the following criteria shall be applied:

• constant term investments: the remaining term until maturity shall be considered taking into account the automatic extension or, if applicable, the term resulting from exercising the option to revoke it;
• investments with early cancellation option: the term remaining until the date on which the investor can exercise the early cancellation option shall be taken into account, to the extent that they are the holder of the right; in the case where the entity is the holder of that right, the originally agreed term shall be taken into account;
• investments with renewal option for a determined term: the remaining term until maturity shall be considered, taking into account for this effect what would result from the eventual exercise of the extension option by the entity, to the extent that it is the holder of the right; when the investor is the holder of that right, the originally agreed term or, if applicable, what results from the renewal when the option has been exercised shall be taken into account.

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Version: 2nd	Communication	Validity	Page 1
"A" 2511	17.1.97
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I MINIMUM LIQUIDITY REQUIREMENTS I
B.C.R.A.	------	Section 2. Computation.
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In the case of the remaining term operations -including obligations with banks and foreign correspondents computable-, the residual terms shall be computed according to the number of days remaining until the maturity of the obligation, counted from each of the days of the same computation period to which the minimum liquidity requirements correspond. The requirements will arise from applying the established rates on the daily balances of the aforementioned obligations based on the different residual maturity tranches that are set.

Furthermore, in the particular case of obligations for integral or periodic payments of principal, the amounts of the amortization services that mature within the year, counted from each of the days of the position to which the minimum liquidity requirement corresponds, shall be considered independently for the purposes of applying the rate that is appropriate based on the number of days remaining until the maturity of each of them.

When the financial entity enters into options agreements or contracts that ensure the total or partial refinancing of term obligations, for the purpose of establishing the residual term until the maturity of the obligations, the one resulting from making use of these facilities shall be considered, for the part of the liability included in the agreement. This criterion is applicable in cases where the agreement is carried out with Backstop Fund S.A. (created by the National Government within the framework of the Program for the Development of the Capital Market contracted with the World Bank) or when the counterparty is a foreign bank that has at least an "A" rating or higher granted by any of the international risk assessment agencies according to the list contained in point 2.2. of Section 2 of the standardized text of the rules on Asset Rating for Investments with Pension and Retirement Funds (Communication "A" 2484).

The computation periods will coincide with calendar months.
The averages are obtained by dividing the sum of the daily balances by the total number of days of each calendar month.

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Version: 3rd	Communication	Validity	Page 2
"A" 2511	17.1.97
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I MINIMUM LIQUIDITY REQUIREMENTS I
B.C.R.A.	------	Section 4. Minimum Requirements.
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On days when no movement is registered, the balance corresponding to the immediate preceding business day shall be repeated.
The requirements arising from applying the following rates shall be integrated:

Concept Rates in %

• in common checking and deferred payment accounts, in pesos and in US dollars 18
• in savings accounts in pesos and in foreign currency 18
• usury accounts, special accounts for closed circles and "Unemployment Fund for Construction Industry Workers" 18
• other deposits and demand obligations, including with banks and foreign correspondents -except foreign trade obligations-, immobilized balances in pesos, in foreign currency and in securities, and unused balances of formalized current account advances 18
• fixed-term deposits in pesos, in foreign currency and in securities, obligations from "acceptances", passive securities and foreign currency swaps, sureties and stock market swaps, other term obligations in pesos and in foreign currency and term obligations with banks and foreign correspondents -except foreign trade obligations-, negotiable obligations and constant term investments, with early cancellation option or renewal option for a determined term and with variable remuneration:
  • up to 59 days 18
  • from 60 to 89 days 18
  • from 90 to 179 days 13
  • from 180 to 365 days 8
  • more than 365 days 0

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Version: 4th	Communication	Validity	Page 1
"A" 2511	1.2.97
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I MINIMUM LIQUIDITY REQUIREMENTS I
B.C.R.A.	------	Section 4. Minimum Requirements.
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foreign trade obligations), negotiable obligations and constant term investments, with early cancellation option or renewal option for a determined term and with variable remuneration:

• up to 59 days 18
• from 60 to 89 days 18
• from 90 to 179 days 13
• from 180 to 365 days 8
• more than 365 days 0

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Version: 4th	Communication	Validity	Page 2
"A" 2511	1.2.97
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