Circular LISOL 1-246: Minimum Capital of Financial Entities. Requirements for Mortgage Loans. Modification

"1999 - Year of Exportation"

CENTRAL BANK OF THE ARGENTINE REPUBLIC
____________________________________________________________________ COMMUNICATION "A" 2939 I 28/06/99 ____________________________________________________________________

TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 246.
Minimum capital of financial entities.
Requirement regarding mortgage loans.
Modification.

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

"1. Incorporate into point 3.1.1.7. of Section 4. of the norms on minimum capital of financial entities the following subsection:

"v) First priority on real estate for own housing that are subject to the lien, when it concerns financings granted for their acquisition or improvement or cancellation of pre-existing loans agreed with that destination, and the following conditions are verified:
a) maximum valuation of the property: $ 70,000. b) maximum term: 10 years. c) compliance with the remaining guidelines established in the Manual of Origin and Administration of Real Estate Loans, with the exception of the requirement linked to the method of determining the computable income of the applicants.

• Regarding the credit support that does not exceed 50% of the valuation value of such properties. 50
• Regarding the credit support that exceeds 50% of the valuation value of such properties. 100"

2. Substitute subsection i) of point 3.1.1.7. of Section 4. of the norms on minimum capital of financial entities with the following:

"3.1.1.7. Mortgage. i) First priority on real estate for own housing that are subject to the lien, when it concerns financings granted from 1.1.98, for their acquisition or improvement or cancellation of pre-existing loans agreed with that destination (according to the Manual of Origin and Administration of Real Estate Loans), and according to the result of the comparison between the values of the index of "Evolution of the price of the square meter in sales operations (country average)", which is elaborated monthly by Banco Hipotecario S.A. and whose series are published by the B.C.R.A., corresponding to the third month prior to that in which the financing is granted and to the base month -October 1997= 100-, according to the following scale:
a) Up to 1.50:

• Regarding the credit support that does not exceed 75% of the valuation value of such properties. 50
• On the amount that exceeds 75% of the valuation value of such properties. 100
  b) More than 1.50 and up to 2. 100 c) More than 2. 200

The weight applicable to each operation will not be modified by subsequent variations of the usable index."

3. Establish that financings granted in accordance with the conditions referred to in subsection v) of point 3.1.1.7 of Section 4. of the norms on minimum capital of financial entities (text according to point 1. of this communication), will be considered as granted with preferred guarantees for the purposes of the norms on minimum provisions for risk of uncollectibility and fragmentation of credit risk."

We greet you very attentively.

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