Circular No. 2.962

CIRCULAR N. 002962 ------------------ Establishes and regulates the granting of Central Bank Rediscount, in the rediscount and purchase modalities, with repurchase commitment, of securities, credits and credit rights forming part of the assets of financial institutions. The Collegiate Board of the Central Bank of Brazil, 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 2000, the granting of Central Bank Rediscount to multiple banks with a commercial portfolio, to commercial banks and to savings banks. Art. 2 The Central Bank Rediscount referred to in this Circular shall comprise two basic modalities, 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 PURCHASE, WITH REPURCHASE COMMITMENT Art. 3 The purchase operations, with repurchase commitment, may be: I - very short term, for 1 (one) day, intended to satisfy the liquidity needs of a financial institution arising from a momentary mismatch in its cash flow; II - short term, of up to 15 (fifteen) business days, and 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 - medium term, of up to 90 (ninety) calendar days, and may be recontracted, provided that the total term does not exceed 180 (one hundred and eighty) calendar days, intended to enable the equity 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 System for Settlement and Custody (SELIC), credits and credit rights, of normal course and preferably with real guarantee, registered under account 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 very short term operations, in which only federal public securities registered in SELIC shall be admitted, subject to the following negotiating 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) Resale price: purchase price updated, from the date of the operation, by the SELIC Rate, plus a percentage to be defined by the Monetary Policy Director, in line with monetary policy guidelines. Paragraph 2 In the medium-term purchase, with repurchase commitment, which shall be conditioned upon approval by the Collegiate Board of the Central Bank of Brazil, the financial institution shall submit a substantiated request to the Banking Operations Department (DEBAN) where it is under jurisdiction, accompanied, obligatorily, 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 REDISCOUNT Art. 4 The rediscount operations may be: I - short term, of up to 15 (fifteen) business days, and 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 - medium term, of up to 90 (ninety) calendar days, and may be extended, provided that the total term does not exceed 180 (one hundred and eighty) calendar days, intended to enable the equity adjustment of a financial institution with a problem of structural imbalance. Paragraph 1 The rediscount shall involve securities and discounted credit rights forming part of the assets of the financial institution, subject to the following negotiating conditions: a) Rediscount rate: variable depending on the assets, according to criteria defined by the Central Bank of Brazil; b) Sale of 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 percentage to be defined by the Monetary Policy Director, in line with monetary policy guidelines. Paragraph 2 In the medium-term rediscount, which shall be conditioned upon approval by the Collegiate Board of the Central Bank of Brazil, the financial institution shall submit a substantiated request to the Banking Operations Department (DEBAN) where it is under jurisdiction, accompanied, obligatorily, 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 All financial movement related 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. Art. 6 The formalization of the
operations shall be carried out 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. 1.925-3, of 6 January 2000, shall be used. Art. 7 All documentation required for the purpose 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 under 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 subject to definition between the parties. Art. 9 The Department of Banking Operations (DEBAN) and the Department of Open Market Operations (DEMAB) may issue the complementary rules necessary for the operationalization of the Central Bank Rediscount defined by this Circular. Art. 10 This Circular shall enter into force on 14 February 2000, when Circulars Nos. 2.711 and 2.712, both of 28 August 1996, and 2.869, of 4 March 1999, and Circular Letter No. 2.839, of 5 March 1999, shall be revoked. Brasília, 26 January 2000 Luiz Fernando Figueiredo Director