Circular No. 2887 — Establishes Procedures for Registration and Evaluation of Securities Acquired Under Resolutions No. 2440/1997, No. 2483/1998, and Circular No. 2781/1997

CIRCULAR NO. 002887

Estabelece procedimentos para registro e avaliação de títulos adquiridos nos termos das Resoluções nºs 2.440, de 1997, e 2.483, de 1998, e da Circular nº 2.781, de 1997.

The Collegiate Board of the Central Bank of Brazil, in a session held on May 12, 1999, based on Article 4, item XII, of Law No. 4.595, of December 31, 1964, by competence delegated by the National Monetary Council, by act of July 19, 1978,

DECIDED:

Article 1. Securities acquired under the terms of Resolutions No. 2440,
of November 12, 1997, and No. 2483, of March 26, 1998, and Circular No. 2781, of November 12, 1997, by financial institutions and other institutions authorized to operate by the Central Bank of Brazil, shall be unavailable until their respective maturity or until the effective application of the resources for the purposes to which they are destined, prohibiting their use in any form of negotiation, including those related to the provision of guarantees.

Paragraph 1. The unavailability must be characterized by registration in a specific account in the Special Settlement and Custody System (SELIC);

Paragraph 2. Institutions shall have a maximum period of 30 (thirty) days to comply with the prohibition referred to in this article.

Article 2. Securities registered in the manner of the preceding article,
for which there is the intention of management and financial capacity to hold them in the portfolio until maturity, must be evaluated at their acquisition cost, plus the earnings accrued, cumulatively observing that:

I - the resources used for the acquisition must originate from collection through public issuance abroad;

II - the term of these securities cannot exceed that of the external resource collection operation that served as backing for their acquisition;

III - they must remain unavailable until their respective maturity.

Article 3. It is mandatory to disclose, in explanatory notes to
financial statements, information that includes, regarding the securities referred to in Article 2, at least the following aspects:

I - the amount, nature, and maturity;

II - the linkage with external resources;

III - the market value, segregated by type of security.

Article 4. In addition to the minimum information required in the
previous article, a declaration regarding the institution's capacity and intention to hold the securities until maturity, as provided in
Article 2, must be disclosed in the Management Report.

Article 5. Institutions must keep available to the Central Bank of
Brazil managerial reports that clearly and objectively demonstrate the operations in which the procedures provided for in this Circular were adopted.

Article 6. The adoption of the procedure provided for in this Circular
is admitted for securities in the portfolio, provided that the provisions of Article 2 are met, through the reversal of provisions for adjustment to market value that may have been established.

Paragraph 1. The reversals referred to in this article must be registered as a credit to the appropriate sub-item of the accounting security:

I - REVERSAL OF OPERATIONAL PROVISIONS, code 7.1.9.90.00-8, when referring to provisions established until December 31, 1998;

II - OPERATIONAL PROVISION EXPENSES, code 8.1.8.30.00-0, when referring to provisions established after December 31, 1998.

Paragraph 2. The effect on the result and equity of the reversal referred to in this article must be evidenced in an explanatory note to the financial statements related to the base dates of June 30 and December 31, 1999.

Article 7. This Circular enters into force on the date of its publication.

Brasília, May 12, 1999

Sérgio Darcy da Silva Alves
Director