Circular Monetary Regulations - REMON 1 - 309, Passive Operations - OPASI 1 - 83, and Active Operations - OPRAC 1 - 142. Acceptances, Guarantees for Loans of Public Securities, and Deposits at Unregulated Interest Rates

BANCO CENTRAL DE LA REPÚBLICA ARGENTINA
COMMUNICATION "A" 925 30/09/86
TO FINANCIAL ENTITIES:
Ref.: CIRCULARS MONETARY REGULATIONS -
REMON - 1 - 309, PASSIVE OPERATIONS -
OPASI - 1 - 83 and ACTIVE OPERATIONS -
OPRAC - 1 - 142. Acceptances, guarantees for loans of public securities and deposits at unregulated interest rate

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

“ 1. Establish that, effective October 1, 1986, banks not included in Annex V to Communication “A” 865 and finance companies may carry out intermediation operations in financial transactions between third parties resident in the country (acceptances of documents issued in australes) subject to the provisions contained in Chapter III of Circular OPASI - 1 (Communication “A” 59) and the following conditions:
1.1. Minimum amount: the capital effectively transacted in each primary placement operation shall not be less than the amount established. Initially it will be A 8,000.-
1.2. Minimum cash: 3%.
1.3. Secondary negotiation: it will always be admitted provided that a period of no less than 7 days elapses between each negotiation.
1.4. Minimum term: 7 days from the primary placement until maturity.
1.5. Participations: their issuance will not be admitted in these operations.
1.6. Intermediation margin: it will be freely agreed upon by the parties both in the primary placement and in the secondary negotiation.
1.7. Repurchase: financial entities may apply the lending capacity of non-transferable fixed-term deposits at unregulated interest rates by the Central Bank and their own resources (net of immobilized assets) in the repurchase or purchase of documents from this market.
1.8. Advertising: it must be stated that the documents transacted are not covered by the Deposit Guarantee Regime established by Article 56 of Law 21.526, modified by Law 22.051, and to notify investors of this fact reliably.
1.9. Other provisions: the rules issued in due course regarding intermediation in financial transactions (Circular OPASI - 1, Chapter III) and secondary negotiation of transferable credit instruments (Circular OPRAC - 1, Chapter I, point 3.3.) that are not modified by this resolution shall apply.

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2. Admit, effective October 1, 1986, that the entities included in the previous point grant guarantees on operations for loans of national public securities, arranged between third parties resident in the country, in accordance with the following conditions:
2.1. Minimum amount: the capital of each transaction shall not be less than the amount established. Initially it will be A 25,000.
2.2. Minimum term: 90 days, counted from the date of granting the guarantee until the maturity of the loan.
2.3. Commissions: they will be freely agreed upon by the parties.
2.4. Coverage margin: borrowers of loans will be required to constitute a pledge guarantee in favor of the intervening entity, for an amount not less than 5% of the outstanding balance at all times, on securities of the same class as those received in loan.
2.5. Other provisions: the securities encumbered, referred to in point 2.4., shall be deposited in custody with the guaranteeing entity, which will keep them in a specific and individualized area of its treasury, to which the Central Bank will have access.
The class, series, and numbering of the securities must be registered in a book authorized for this purpose, with the safeguards established in the Code of Commerce, identifying the operation to which they correspond (date, names of the intervening parties, amount transacted, maturity, etc.). This register may be replaced by a system of movable sheets in accordance with what is provided in Article 61 of Law 19.550.
3. Provide that, effective January 1, 1986, financial entities must constitute in the Central Bank a special deposit “at unregulated rate”, not computable for the integration of the minimum cash, under the following conditions:
3.1. Amount: that resulting from the greater of
3.1.1. 106% of the sum of the requirements of the financial asset “at unregulated rate” and
of minimum cash on non-transferable fixed-term deposits at unregulated interest rates, corresponding to September 1986, and
3.1.2. 116% of the sum of the aforementioned requirements, corresponding to August 1986.
3.2. Remuneration: the average balances of the special deposit will be adjusted by the variation of an index elaborated based on the rate resulting from applying a coefficient “k”, which the Central Bank will periodically establish, on the basic rate calculated according to the methodology set forth in the Annex to Communication “A” 879.

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  B.C.R.A. COMMUNICATION "A" 0925 30/09/86
  With effect on the first day of each month, the adjustments corresponding to the previous period will be credited to the current account opened at the Central Bank or accumulated in the special deposit account “at unregulated rate”, according to the proportions that will be periodically determined. At minimum, 15% of the adjustments accrued monthly will be credited to the current account.
  3.3. Transferability: the transfer between entities of the balances invested in the special deposit account “at unregulated rate” will be admitted to be applied to another account of the same nature. At no time shall the balance of the aforementioned deposit be less than 85% of the initial imposition, as provided in point 3.1., updated by the rate of variation implicit in the accumulation of adjustments referred to in point 3.2. carried out until the month prior to the transfer.
  3.4. Encumbrance: entities may encumber the balances of the special deposit as guarantee for interfinancial loans, to the extent that no less than 85% of the initial imposition, adjusted according to point 3.3., remains free of encumbrance.
  3.5. Integration: the deposit will be effected no later than October 20, 1986. Failure to present the relevant deposit order in due time will determine the application during the period of delay of a charge calculated at a rate equivalent to the maximum rediscount rate prevailing in the same period, on the amount to be transferred or on the increases resulting from subsequent corrections. This without prejudice to the computation provided by regulation for operations with value date.

4. Establish that the monthly average of daily balances of the capitals effectively transacted in “acceptances”, the guarantees referred to in point 2., and the non-transferable fixed-term deposits at unregulated interest rate shall not exceed, jointly, the amount resulting from adding the amounts obtained by applying the proportions established by the Central Bank on the following concepts:
   4.1. Deposits and obligations at regulated rate subject to fractional reserve, measured on the basis of the monthly average of daily balances of the month in question.
   4.2. Computable net worth of the last day of the month prior to the one in question.
5. Provide that at no time shall the daily balance of the concepts indicated in point 4. be greater than 5 times the computable net worth of the last day of the month prior to the one in question.
   The daily balance of the guarantees granted on the loans of securities referred to in point 2. shall not be greater than 1 time the aforementioned net worth.
6. Establish that departures from the operational limits fixed in points 4. and 5. will have the following treatment:

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6.1. Excesses to the limit provided in point 4.: increase of the minimum cash requirement corresponding to the same month by an equivalent amount.
6.2. Excesses to the limits contemplated in point 5.: charge of 0.8 times the maximum rediscount rate.
In addition, entities that incur in such excesses must explicitly state in the corresponding monthly reports the causes of the departures and the measures adopted to correct them.
7. Substitute, effective October 1, 1986, point 5. of Annex I to Communication “A” 613, text according to Communication “A” 910, with the following:
“ 5. Impositions must be constituted for amounts not less than those established.”
Initially they will be the following:
Term of the deposits Minimum imposition
From 7 to 14 days ………………………………………… A 8,000
From 15 to 29 days ………………………………………. A 5,000
From 30 days or more ……………………………….. A 3,500
8. Fix, for October 1986, the proportions for the determination of the operational quota referred to in point 4. as indicated below:
CONCEPT
National public financial entities, private local entities of foreign capital and local branches of foreign entities Cooperative banks and Credit Unions Rest of entities

• Deposits and other obligations subject to fractional reserve (point 1.2. of Table A
  of Formula 3000) 119.5% 143.5% 132.5%
• Computable net worth 67.5% 102.0% 84.0%

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B.C.R.A. COMMUNICATION "A" 0925 30/09/86
9. Fix, effective October 1986, for non-transferable fixed-term deposits at unregulated rate by the Central Bank, the minimum cash requirements as follows:
Term of the deposits Rate
From 7 to 29 days ………………………………….. A 3.0%
From 30 to 89 days ………………………………… A 1.5%
From 90 days or more ……………………………… A 0 %
10. Fix, effective October 1986, at 1.026 the coefficient “k” referred to in point 3.2.
11. Repeal, effective October 1, 1986, the following provisions:
11.1. point 2. of Annex III to Communication “A” 613 (text according to Communication “A”
694).
11.2. point 5. of Annex III to Communication “A” 613 (text according to Communication “A”
859).
11.3. on integration of the financial asset “at unregulated rate” (Communication “A”
733 and complementary).
11.4. points 1. and 4. of Communication “A” 911.”

We salute you very respectfully.
BANCO CENTRAL DE LA REPÚBLICA ARGENTINA
Alfredo A. Besio
Manager of Standards for
Financial Entities
Julio A. Piekarz
General Sub-manager