Circular No. 2.965

CIRCULAR N. 002965 ------------------ Establishes and regulates the granting of Central Bank Rediscount, in the forms of rediscount and purchase, with repurchase commitment, of securities, credits and credit rights comprising the assets of financial institutions. The Collegiate Board of Directors of the Central Bank of Brazil, in a session held on 3 February 2000, having regard to the provisions of art. 10, items V and XII, of Law No. 4.595, of 31 December 1964, renumbered by virtue of arts. 19 and 20 of Law No. 7.730, of 31 August 1989, and in Resolution No. 2.685, of 26 January 2000, D E C I D E D: Art. 1 To establish and regulate, for the purposes of Resolution No. 2.685, of 26 January 2000, the granting of Central Bank Rediscount to multiple banks with commercial portfolios, commercial banks and savings banks. Art. 2 The Central Bank Rediscount addressed in this Circular shall comprise two basic forms, namely: I - Purchase, with repurchase commitment; and II - Rediscount. Sole Paragraph. The Central Bank Rediscount operations shall be granted, at the discretion of the Central Bank of Brazil, upon request by the financial institution. ON THE PURCHASE, WITH REPURCHASE COMMITMENT Art. 3 The purchase operations, with repurchase commitment, may be of: I - 1 (one) day, intended to satisfy the liquidity needs of a financial institution arising from a momentary mismatch in its cash flow; II - up to 15 (fifteen) business days, which may be recontracted, provided that the total term does not exceed 45 (forty-five) business days, intended to satisfy the liquidity needs of a financial institution arising from a temporary mismatch in its cash flow and that do not characterize a problem of structural imbalance; III - up to 90 (ninety) calendar days, which may be recontracted, provided that the total term does not exceed 180 (one hundred and eighty) calendar days, intended to enable the capital adjustment of a financial institution with a problem of structural imbalance; Paragraph 1 The purchase, with repurchase commitment, shall involve federal public securities registered in the Special Settlement and Custody System (SELIC), credits and credit rights, preferably with real guarantee, registered under accounting heading 1.6.0.00.00-1 - Credit Operations of the Chart of Accounts for Institutions of the National Financial System (COSIF) and other assets, at the exclusive discretion of the Central Bank of Brazil, except in the one-day operations referred to in item I of art. 3 hereof, in which only federal public securities registered in SELIC shall be admitted, subject to the following negotiation conditions: a) Limit: valuation amount, by the Central Bank of Brazil, of the assets subject to purchase; b) Purchase price: 1. federal public securities registered in SELIC: respective unit prices used by the Central Bank of Brazil in its repurchase operations, disclosed daily by the Open Market Operations Department (DEMAB); 2. other assets: variable depending on
the assets, according to criteria defined by the Central Bank of Brazil, provided that the purchase price may not be higher than the present value of the asset subject to purchase; c) Repurchase price: purchase price updated, from the date of the operation, by the SELIC Rate, plus a rate to be defined by the Monetary Policy Committee (COPOM), in line with monetary policy guidelines. Paragraph 2 In the purchase, with repurchase commitment, of up to ninety days, referred to in item III of this article, which shall be conditioned upon approval by the Collegiate Board of Directors of the Central Bank of Brazil, the financial institution shall submit a substantiated request to the Banking Operations Department (DEBAN) where it is subject to jurisdiction, accompanied, mandatorily, by: a) statement of cash needs; and b) restructuring program aimed at capitalization or sale of the controlling interest, signed by the controlling shareholder, to be implemented during the term of the operation. ON THE REDISCOUNT Art. 4 The rediscount operations may be of: I - up to 15 (fifteen) business days, which may be extended, provided that the total term does not exceed 45 (forty-five) business days, intended to satisfy the liquidity needs of a financial institution arising from a temporary mismatch in its cash flow and that do not characterize a problem of structural imbalance; II - up to 90 (ninety) calendar days, which may be extended, provided that the total term does not exceed 180 (one hundred and eighty) calendar days, intended to enable the capital adjustment of a financial institution with a problem of structural imbalance. Paragraph 1 The rediscount shall involve securities and discounted credit rights comprising the assets of the financial institution, subject to the following negotiation conditions: a) Rediscount rate: variable depending on the assets, according to criteria defined by the Central Bank of Brazil; b) Sale of the rediscounted assets: in the event of sale, the price of the assets shall correspond to the amount determined in the rediscount operation updated, in the respective period, by the SELIC Rate, plus a rate to be defined by the Monetary Policy Committee (COPOM), in line with monetary policy guidelines. Paragraph 2 In the rediscount of up to ninety days, referred to in item II of this article, which shall be conditioned upon approval by the Collegiate Board of Directors of the Central Bank of Brazil, the financial institution shall submit a substantiated request to the Banking Operations Department (DEBAN) where it is subject to jurisdiction, accompanied, mandatorily, by: a) statement of cash needs; and b) restructuring program aimed at capitalization or sale of the controlling interest, signed by the controlling shareholder, to be implemented during the term of the operation. GENERAL PROVISIONS Art. 5 Any financial movement relating to credits and debits linked to the operations addressed in this Circular shall be recorded in the Banking
Reserves account maintained by the beneficiary financial institution with the Central Bank of Brazil. Sole paragraph. Purchase operations, with a resale commitment, involving assets that have registration, trading and movement in custody centers, shall be subject to the rules and operational procedures set forth in the regulation annexed to Circular No. 2,727, of 14 November 1996, and the regulation annexed to Resolution No. 2,675, of 21 December 1999. Art. 6 The formalization of operations involving assets that do not have registration, trading and movement in custody centers shall be effected through the prior signing of a standard contract. Sole paragraph. In rediscount operations, in addition to a standard contract, the transfer terms addressed in paragraph 1 of art. 21 of Provisional Measure No. 1,925-4, of 3 February 2000, shall be used. Art. 7 All documentation required for the purposes of qualification for the Central Bank Rediscount modalities, required in the form of the legislation and regulations in force, shall be forwarded to the Department of Banking Operations (DEBAN) where the financial institution is located within its jurisdiction. Art. 8 In the rediscount operations referred to in art. 4 of this Circular, the Central Bank of Brazil shall pay to the rediscounting institution a del credere commission, as remuneration for the administration of the assets rediscounted to it and which shall be the subject of definition between the parties. Art. 9 The Department of Banking Operations (DEBAN) and the Open Market Operations Department (DEMAB) may issue the complementary rules necessary for the operationalization of the Central Bank Rediscount defined by this Circular. Art. 10. The Central Bank Rediscount shall enter into force on 14 February 2000, when Circulars Nos. 2,712, of 28 August 1996, and 2,869, of 4 March 1999, and Letter-Circular No. 2,839, of 5 March 1999, shall be revoked. Art. 11. This Circular shall enter into force on the date of its publication. Art. 12. Circular No. 2,962, of 26 January 2000, is revoked. Brasília, 8 February 2000 Luiz Fernando Figueiredo Director --------------------------------------------------------------------- Note: Republished for correction of paragraphs 2 of arts. 3 and 4