Circular LISOL 1-233: Minimum Liquidity Requirements, Non-compliance, and Submission of Compliance Programs

"1999 - Year of Exportation"

CENTRAL BANK OF THE ARGENTINE REPUBLIC
________________________________________________________________ COMMUNICATION "A" 2895 I 03/31/99 ________________________________________________________________ TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 233.
Minimum liquidity requirements.
Non-compliance.
Submission of compliance programs.

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

"- Replace point 3.2 of Section 3 of the norms on minimum liquidity requirements with the following:

"3.2. Compliance Programs.
3.2.1. Determining Situation.
In the event that the total integration defects, including for these purposes the margin transferred to the following month, in the average position exceeds 20% of said adjusted minimum liquidity requirement, the reiteration of non-compliance for two consecutive months or four alternating months within a one-year term will determine the obligation for the respective entity to present a compliance program, within the 20 calendar days following the close of the period in which any of those circumstances is recorded."

3.3. Regularization and Sanitation Plans.
The requirement to present a regularization and sanitation plan, by determining that liquidity is affected by the recorded defects, will have the following consequences.

3.3.1. Institutional Aspects.
It shall constitute an impediment for:
i) Transformation of financial entities. ii) Installation of subsidiaries in the country and abroad. iii) Increases in participation in financial entities of the country and abroad. iv) Installation of representation offices abroad.

3.3.2. Limitation on Deposit Growth.
From the first day of the month following the request for presentation of the plan, the amount of deposits in pesos, in foreign currency, and in securities, may not exceed the level that in monthly average of daily balances had been reached during the previous period. The lifting of that restriction will be subject to the resolution adopted regarding the presented plan."

Attached we send you the sheets that, due to the resolution transcribed above, correspond to incorporate into the ordered text of the norms issued by this Institution in this matter, replacing those previously provided.

We salute you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC
Juan Carlos Isi Alfredo A. Besio
Sub-manager of Standards Sub-manager of Standards for Financial Entities for Financial Entities

ANNEX

B.C.R.A. MINIMUM LIQUIDITY REQUIREMENTS
Section 3. Non-compliance.
c: amount of the charge.
D: deficiency subject to charge, expressed in numerals.
TNA: annual nominal rate applicable to non-compliance, as a percentage.
To determine interest for charges not entered in time and form, the following expression will be applied:
i = [(1 + TEA)^(n/365) - 1] * 100 where i: interest rate corresponding to the delinquency period, as a percentage, with two decimals. TEA: effective annual rate during the delinquency period, as a unit. n: number of calendar days between the deadline fixed for the effectiveness and the day prior to the presentation of the relevant debit note for the current account opened at the Central Bank of the Argentine Republic. For the purposes of rounding the magnitudes of “c” and “i”, the values will be incremented by one unit when the third digit of the fractions is equal to or greater than 5, discarding the latter if they result lower.

3.2. Compliance Programs.
3.2.1. Determining Situation.
In the event that the total integration defects, including for these purposes the margin transferred to the following month, in the average position exceeds 20% of said adjusted minimum liquidity requirement, the reiteration of non-compliance of that magnitude for two consecutive months or four alternating months within a one-year term will determine the obligation for the respective entity to present a compliance program, within the 20 calendar days following the close of the period in which any of those circumstances is recorded.

3.3. Regularization and Sanitation Plans.
The requirement to present a regularization and sanitation plan, by determining that liquidity is affected by the recorded defects, will have the following consequences.

3.3.1. Institutional Aspects.
It shall constitute an impediment for:
i) Transformation of financial entities. ii) Installation of subsidiaries in the country and abroad. iii) Increases in participation in financial entities of the country and abroad. iv) Installation of representation offices abroad.

3.3.2. Limitation on Deposit Growth
From the first day of the month following the request for presentation of the plan, the amount of deposits in pesos, in foreign currency, and in securities, may not exceed the level that in monthly average of daily balances had been reached during the previous period. The lifting of that restriction will be subject to the resolution adopted regarding the presented plan. Version: 2nd Communication “A” 2895 Validity:
03/31/99

ORDERED TEXT SOURCE NORM
Section Point Paragraph Com. Annex Point Paragraph Observations
2. 2.1.12. “A” 2422 unique 3.1.7. According to Com. “A”
2648
2. 2.2. “A” 2422 unique 3. 1st and 2nd According to Com. “A”
2663 and 2833
2. 2.3. “A” 2422 unique 3.2. According to Com. “A”
2705 except ii) “A” 2817 3.
2. 2.4. “A” 2610 I I.1. 3rd
3. 3.1.1. “A” 2422 unique 5. According to Com. “A”
2490, modified by
Com. “A” 2833
3. 3.1.2. to
3.1.4.
“A” 2422 unique 5. According to Com. “A”
2490
3. 3.1.5. “A” 2422 unique 5. According to Com. “A”
2490
“B” 5159
3. 3.2. “A” 2895
3. 3.3. “A” 2833 2. According to Com. “A”
2895
4. 4.1. Explicit criterion
5. “A” 2422 unique 6. According to Com. “A”
2490, with clarification interpretative
6. 6.1. “A” 2422 unique 3.3. According to Com. “A”
2705 and 2694
6. 6.2. “A” 2422 unique 8.
6. 6.3. “A” 2422 unique 9. According to Com. “A”
2648