Circular No. 3614 — Sets conditions for issuing Real Estate Credit Notes (LCI) and authorizes issuance by investment banks

The Collegiate Board of the Central Bank of Brazil, in a session held on November 14, 2012, based on arts. 10, item VI, of Law No. 4,595, of December 31, 1964, 12 and 17 of Law No. 10,931, of August 2, 2004,

R E S O L V E:

Art. 1º The minimum maturity period for the Real Estate Credit Note (LCI) is:

I - 36 (thirty-six) months, when updated monthly by a price index;

II - 12 (twelve) months, when updated annually by a price index; and

III - 60 (sixty) days, when not updated by a price index.

Sole Paragraph. The periods referred to in this article must be counted from the date on which a third party acquires the LCI from the issuing institution.

Art. 2º Issuing institutions are prohibited from:

I - repurchasing or redeeming, in whole or in part, LCI before the minimum periods established in Art. 1º;

II - making payment of the values related to monetary updates accrued since issuance, when the repurchase by the issuing institution, or the total or partial redemption, occurs before the agreed maturity date; and

III - issuing LCI:

a) while the total credit balance of previously issued real estate credit notes exceeds the total debit balance of the credit or credits that back them;

b) whose value, added to the credit balance of previously issued real estate credit notes, exceeds the debit balance of the credit or credits that back them; and

c) backed by credit operations recorded at a loss.

Sole Paragraph. The prohibition mentioned in item I also applies to repurchases made by institutions affiliated with the LCI issuer, except in the case of operations carried out for the purpose of intermediation.

Art. 3º Real estate credit operations linked in accordance with Resolution No. 2,921, of January 17, 2002, or carried out through agreements for the compensation and settlement of obligations within the National Financial System (SFN), governed by Resolution No. 3,263, of February 24, 2005, or guaranteed by time deposits or other securities, may only be used as backing for the issuance of LCI at their net value, minus the obligation with which they are related.

Art. 4º Starting from January 1, 2013, the registration of LCI issued after the entry into force of this Circular in financial asset registration and settlement systems authorized by the Central Bank of Brazil must allow for the identification:

I - of the issuance conditions of the LCI, as provided for in arts. 12 to 15 of Law No. 10,931, of August 2, 2004;

II - of the credit or credits that back the issuance of the LCI, classified according to the following categories:

a) housing financings contracted within the Housing Financial System (SFH), secured by mortgage or fiduciary alienation of real estate;

b) other real estate financings secured by mortgage or fiduciary alienation of real estate;

c) loans to natural persons secured by mortgage or fiduciary alienation of residential real estate; and

d) other loans and financings secured by mortgage or fiduciary alienation of real estate;

III - of the conditions of the credit or credits that back the issuance of the LCI.

§ 1º For the purposes of item II, letter “a”, housing financings within the SFH are considered to be the operations described in items I to IV of Art. 2º of the Regulation annexed to Resolution No. 3,932, of December 16, 2010.

§ 2º For the purposes of item II, letter “b”, other real estate financings are considered to be the operations described in items I to III of Art. 3º of the Regulation annexed to Resolution No. 3,932, of 2010.

§ 3º The information provided for in items I to III must be updated at least monthly.

§ 4º The information provided for in item III must allow for reconciliation with that sent to the Credit Information System (SCR), in accordance with Resolution No. 3,658, of December 17, 2008.

Art. 5º Financial institutions must, by June 28, 2013, supplement the registration, in financial asset registration and settlement systems authorized by the Central Bank of Brazil, of real estate credit notes issued before the entry into force of this Circular and not yet redeemed, with the information referred to in Art. 4º, with only the classification of the respective backing in the categories listed in item II, letters “a” to “d”, of the same article being dispensed with.

Art. 6º The financial asset registration and settlement systems mentioned in Arts. 4º and 5º must allow the Central Bank of Brazil access to the information and documents necessary for the performance of its legal duties.

Art. 7º The Department of Financial System Monitoring (Desig) is authorized to establish the operational procedures necessary to comply with the provisions of Art. 6º of this Circular.

Art. 8º Investment banks are authorized to issue LCI.

Art. 9º This Circular enters into force on the date of its publication.

Art. 10. Circular No. 3,152, of September 20, 2002, is hereby repealed.

Luiz Awazu Pereira da Silva
Director of Financial System Regulation