Circular LISOL 1-299 and OPRAC 1-485: Preferred Guarantees 'A'. Incorporation of Credit Instruments from Significant Debtors

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
COMMUNICATION "A" 3114 5/05/00
TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL - 1 – 299
OPRAC – 1 - 485
Preferred Guarantees "A". Incorporation of credit instruments from significant debtors

We address you to bring to your knowledge that this Institution adopted the following resolution:

"1. Incorporate into Section 1 of the regulations on "Guarantees", effective from 1.5.00, the following point:
"1.1.17. Credit instruments (deferred payment checks, promissory notes, bills of exchange, and credit invoices) discounted with liability for the assignor, in which any of the subjects legally obligated to pay, holding that status as drawer, endorser, acceptor, or guarantor, meets at least one of the following conditions:
1.1.17.1. Register a debt level with the system equal to or greater than $ 5,000,000, according to the latest information available in the "Central of Debtors of the Financial System" and be reported by at least five financial entities in which the debt -in each of them- is at least $ 1,000,000.
It must be classified, in said central, "in normal situation" by all financial entities and, in the case of maintaining outstanding negotiable obligations or other debt titles, these must have a rating at the levels established in point 1.1.17.2. The total financing granted to different assignors and assigned by the entity in this modality to the same legally obligated party, may not exceed 10% of the latter's debts with the financial system, reported in the "Central of Debtors of the Financial System", nor 5% of the entity's computable equity responsibility of the month prior to the one in question, whichever is lower. This last limit will not be observed in the event that the entity has a credit file of said obligated party, in which case the operations will be computed within the assistance margins provided by the regulations applicable in the matter.
1.1.17.2. Maintain outstanding negotiable obligations or other debt titles in the local market that have a local risk rating of "A" or higher or, in the international market, that have an international risk rating equal to or higher than that of the debt issued by the Argentine Republic in the international market granted by any of the rating agencies admitted by the regulations on "Evaluation of Financial Entities", for a sum not less than $ 15,000,000.

The total financing granted to different assignors and assigned by the entity in this modality to the same legally obligated party, may not exceed 5% of the entity's computable equity responsibility of the month prior to the one in question. This limit will not be observed in the event that the entity has a credit file of said obligated party, in which case the operations will be computed within the assistance margins provided by the regulations applicable in the matter."

2. Incorporate into Section 3 of the regulations on "Guarantees", the following point:
   "3.1.20. Credit instruments (point 1.1.17.): 85% of the nominal value of the documents."

In attachment, we send you the pages of the ordered text of the current regulations on "Guarantees" that replace those previously provided.

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Juan Carlos Isi Alfredo A. Besio
Submanager of Regulatory Regime Manager of Standards for Financial Entities

ANNEX: 5 pages.

GUARANTEES B.C.R.A. Section 1. Classes.
1.1.16. Fixed pledge with displacement to the entity.
1.1.17. Credit instruments (deferred payment checks, promissory notes, bills of exchange, and credit invoices) discounted with liability for the assignor, in which any of the subjects legally obligated to pay, holding that status as drawer, endorser, acceptor, or guarantor, meet the following conditions:
1.1.17.1. Register a debt level with the system equal to or greater than $ 5,000,000, according to the latest information available in the "Central of Debtors of the Financial System" and be reported by at least five financial entities in which the debt -in each of them- is at least $ 1,000,000.
It must be classified, in said central, "in normal situation" by all financial entities and, in the case of maintaining outstanding negotiable obligations or other debt titles, these must have a rating at the levels established in point 1.1.17.2. The total financing granted to different assignors and assigned by the entity in this modality to the same legally obligated party, may not exceed 10% of the latter's debts with the financial system, reported in the "Central of Debtors of the Financial System", nor 5% of the entity's computable equity responsibility of the month prior to the one in question, whichever is lower. This last limit will not be observed in the event that the entity has a credit file of said obligated party, in which case the operations will be computed within the assistance margins provided by the regulations applicable in the matter.
1.1.17.2. Maintain outstanding negotiable obligations or other debt titles in the local market that have a local risk rating of "A" or higher or, in the international market, that have an international risk rating equal to or higher than that of the debt issued by the Argentine Republic in the international market granted by any of the rating agencies admitted by the regulations on "Evaluation of Financial Entities", for a sum not less than $ 15,000,000.

The total financing granted to different assignors and assigned by the entity in this modality to the same legally obligated party, may not exceed 5% of the entity's computable equity responsibility of the month prior to the one in question. This limit will not be observed in the event that the entity has a credit file of said obligated party, in which case the operations will be computed within the assistance margins provided by the regulations applicable in the matter. Version: 2nd Communication “A” 3114 Validity:
01.05.00

GUARANTEES B.C.R.A. Section 1. Classes.
1.2. Preferred “B”.
They are constituted by real rights over goods or third-party commitments, faithfully instrumented, which ensure that the entity can dispose of the funds as cancellation of the obligation contracted by the client, having previously complied with the procedures established for the execution of the guarantees, and by the guarantees defined in point 1.1. with the exception of those included in point 1.1.11., as long as the residual term of the operations exceeds the term of 6 months. Included in this category, with a taxative enumeration character, are the following:
1.2.1. First degree mortgage privilege on real estate.
1.2.2. Fixed pledge with first degree registration.
1.2.3. Guarantees or sureties granted by reciprocal guarantee societies, registered in the Registry enabled at the Central Bank of the Argentine Republic.
1.2.4. Preferred “A”, in operations with a residual term greater than 6 months, with the exception of those included in point 1.1.11.
1.3. Remaining guarantees.
Guarantees not explicitly included in the preceding points, such as the mortgage in a degree other than first and the pledge or caution of shares or commercial documents and the charges constituted abroad with adjustment to legislations other than the local –except for the cases expressly provided for-, will be considered non-preferred. Version: 1st Communication “A” 3114 Validity:
01.05.00

GUARANTEES B.C.R.A. Section 3. Computation.
3.1.17.1. Up to 1.50: 75% of the appraised value of the asset.
3.1.17.2. More than 1.50 and up to 2: 55% of the appraised value of the asset.
3.1.17.3. More than 2: 40% of the appraised value of the asset.
3.1.18. Fixed pledge with first degree registration (point 1.2.2.): 75% of the appraised value of the asset.
3.1.19. From reciprocal guarantee societies (point 1.2.3.): 90%.
3.1.20. Credit instruments (point 1.1.17.): 85% of the nominal value of the documents.
3.2. Partial coverage with preferred guarantees.
When existing preferred guarantees do not cover the total assistance to the client, the part not reached with that coverage will have the treatment established for debts without preferred guarantees.
Version: 2nd Communication “A” 3114 Validity:
01.05.00

B.C.R.A. ORIGIN OF THE PROVISIONS INCLUDED IN THE ORDERED TEXT OF THE REGULATIONS ON GUARANTEES

ORDERED TEXT	ORIGIN REGULATION
Section	Point	Paragraph	Com.	Annex	Point	Paragraph	Observations
1.	1.1.	“A”	2932	único	1.1.
1.	1.1.1.	“A”	2216	I 1.	3º, a)		According to Com. “A” 2443 and “A” 2932
1.	1.1.2.	“A”	2216	I 1.	3º, a)		According to Com. “A” 2443 and “A” 2932
1.	1.1.3.	“A”	2216	I 1.	3º, b)		According to Com. “A” 2932
1.	1.1.4.	“A”	2216	I 1.	3º, c)		According to Com. “A” 2932
1.	1.1.5.	“A”	2216	I 1.	3º, d)		According to Com. “A” 2932
1.	1.1.6.	“A”	2216	I 1.	3º, e)		According to Com. “A” 2932
1.	1.1.7.	“A”	2216	I 1.	3º, f)		According to Com. “A” 2932
1.	1.1.8.	“A”	2216	I 1.	3º, g)		According to Com. “A” 2932
1.	1.1.9.	“A”	2216	I 1.	3º, h)		According to Com. “A” 2932
1.	1.1.10.	“A”	2216	I 1.	3º, i)		According to Com. “A” 2932
1.	1.1.11.	“A”	2932	único	1.1.11.		According to Com. “A” 3104
1.	1.1.12.	“A”	2932	único	1.1.12.
1.	1.1.13.	“A”	2932	único	1.1.13.
1.	1.1.14.	“A”	2932	único	1.1.14.
1.	1.1.15.	“A”	2932	único	1.1.15.
1.	1.1.16.	“A”	2932	único	1.1.16.
1.	1.1.17.	“A”	3114	1.
1.	1.2.	“A”	2932	único	1.2.		According to Com. “A” 3104
1.	1.2.1.	“A”	2419	1. 1º			Modified by Com. “A” 2563 (points 1. and 2.) and “A” 2932
1.	1.2.2.	“A”	2448				Balance sheet of debtors (point 6.1.2.2.2.) and “A” 2932
1.	1.2.3.	“A”	2448				Balance sheet of debtors (point 6.1.2.2.2.) and “A” 2932
		“A”	2410	7.
1.	1.2.4.	“A”	2932	único	1.2.4.
1.	1.3.	“A”	7				Specifications of the items of “other guarantees received”, modified by Com. “A” 2932
2.	2.1.	1º	“A”	2448			Balance sheet of debtors (point 6.1.2.2.2.)
2.	2.1.	2º	“A”	2932	único	2.1. 2º
2.	2.2.	“A”	2216	I 1.	4º
3.	3.1.	“A”	2932	único	3.1.
3.	3.1.1.	“A”	2932	único	3.1.1.
3.	3.1.2.	“A”	2932	único	3.1.2.
3.	3.1.3.	“A”	2932	único	3.1.3.
3.	3.1.4.	“A”	2932	único	3.1.4.
3.	3.1.5.	“A”	2932	único	3.1.5.
3.	3.1.6.	“A”	2932	único	3.1.6.
3.	3.1.7.	“A”	2932	único	3.1.7.
3.	3.1.8.	“A”	2216	I 1.	3º, g)		According to Com. “A” 2932
3.	3.1.9.	“A”	2216	I 1.	3º, h)		According to Com. “A” 2932
3.	3.1.10.	“A”	2216	I 1.	3º, i)		According to Com. “A” 2932
3.	3.1.11.	“A”	2932	único	3.1.11.		According to Com. “A” 3104
3.	3.1.12.	“A”	2932	único	3.1.12.
3.	3.1.13.	“A”	2932	único	3.1.13.
3.	3.1.14.	“A”	2932	único	3.1.14.
3.	3.1.15.	“A”	2932	único	3.1.15.
3.	3.1.16.	“A”	2932	único	3.1.16.
3.	3.1.17.	“A”	2419	1. 1º, ii)			Modified by Com. “A” 2932
3.	3.1.18.	“A”	2932	único	3.1.18.
3.	3.1.19.	“A”	2932	único	3.1.19.
3.	3.1.20.	“A”	3114	2.
3.	3.2.	“A”	2216	II 5º