Circular LISOL 1 - 204. Minimum Capital of Financial Entities. Determination of Computable Equity Liability

1998 - Year of the Municipalities

CENTRAL BANK OF THE ARGENTINE REPUBLIC
____________________________________________________________________ COMMUNICATION "A" 2768 03/09/98 ____________________________________________________________________ TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 204.
Minimum Capital of Financial
Entities. Determination of
Computable Equity Liability

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

"1. To declare ineffective, for the determination of supplementary net equity that integrates the computable equity liability, the calculation of provisions for uncollectible risk corresponding to debtors classified in "normal situation" or "normal compliance" (point 7.2.2.1. of Section 7. of the norms on minimum capital of financial entities).

2. To replace point 3.4.1. of Section 3. of the norms on minimum capital of financial entities, with the following:
   "3.4.1. Monthly individual and consolidated bases.
   The included concepts will be calculated based on the monthly averages of daily balances of the month preceding that corresponding to the determination of the requirement (capital, interest, premiums and quotation differences, as applicable, net of provisions for uncollectible risk and devaluation and of the accumulated depreciation and amortization attributable to them)."

3. To replace in the second paragraph of point 6.5.3. of Section 6. of the norms on minimum capital of financial entities, the concepts stated in the tenth and twelfth place, with the following:
   "Securities lending, net of provisions for uncollectible risk (+)"

"Loans in foreign currencies other than the US dollar, net of provisions for uncollectible risk (+)"

4. To provide that, for the purposes of verifying compliance with prudential regulations, the provisions in the preceding points will have the following validity:
   4.1. Minimum capital requirement for credit risk:
   31.1.99.
   4.2. Other regulations in which computable equity liability and minimum capital requirement for market risk are taken as reference: February 1999.

5. To establish that non-compliance with the observance of prudential regulations will not be considered as such to the extent that they originate from the application of the provisions in points 1. and 4. of this resolution.
   To this effect, the included entities must present to the Superintendence of Financial and Exchange Entities, by 22.3.99, a gradual adaptation plan that contemplates the framing in the norms no later than June 1999."

We salute you very attentively.

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