Circular No. 3.714

The Collegiate Board of the Central Bank of Brazil, in an extraordinary session held on 20 August 2014, based on the provisions of arts. 9 and 10, item IX, of Law No. 4.595, of 31 December 1964, and in arts. 3, § 2, and 15 of Resolution No. 4.193, of 1 March 2013,

R E S O L V E S :

Art. 1 The arts. 11, 12, 19, 21, 23, 24, 27, 36, 37 and 39 of Circular No. 3.644, of 4 March 2013, shall henceforth be in force with the following wording:

"Art. 11. The exposure value related to the provision of a guarantee, surety, co-obligation or any other form of personal guarantee of the performance of a financial obligation of third parties, referred to in art. 3, item IV, must be determined by multiplying the value of the guarantee, surety, co-obligation or form of guarantee provided by the institution, less any portion already honored, by the following Credit Conversion Factors (CCFs):

• I - 20% (twenty percent), in operations linked to international trade in goods, in which the shipment or receipt of goods represents the guarantee of the operation;

• II - 50% (fifty percent), in operations related to:

  • a) provision of performance guarantees, such as bid bonds in tenders and performance bonds for the provision of services or execution of works;

  • b) provision of a guarantee for the distribution of securities in the primary and secondary markets, by means of a public offering, in accordance with the regulations in force; and

• III - 100% (one hundred percent), in the other cases.

Sole paragraph. The exposure value related to the provision of a guarantee, referred to in the caput, related to an operation not recorded in the Balance Sheet must correspond to the value of the guarantee provided, less any portion already honored, multiplied by the lower of the CCFs applicable to the guarantee or to the guaranteed operation." (NR)

"Art. 12. ........................................................

Sole paragraph. Operations with derivative financial instruments include operations of purchase or sale for future settlement of foreign currency or gold or securities, marked to market." (NR)

"Art. 19. .......................................................

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• II - amounts held in cash, in the foreign currencies issued by the countries referred to in item VII, as well as exposures to the underlying asset represented by the said foreign currencies;

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• VII - operations with central governments of foreign countries and their respective central banks, as well as securities issued by them, whose external risk classification, conferred by a credit rating agency registered or recognized in Brazil by the Securities and Exchange Commission, is:

  • a) equal to or higher than AA- or equivalent classification; or

  • b) equivalent to investment grade, provided that:

    • 1. the reference currency of the operation, security or securities is the local currency of the foreign country;

    • 2. the institution's fundraising is carried out in the local currency of the foreign country.

Sole paragraph. The external classification referred to in item VII must be:

• I - the one with the highest degree of risk, if more than one is available;

• II - the one of the issue, for securities, if available." (NR)

"Art. 21. ........................................................

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• II - demand bank deposits, in foreign currency issued by the countries referred to in art. 19 item VII;

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• VII - ..........................................................

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• b) local currency, in each of the countries referred to in art. 19, item VII;

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• X - operations with maturity in up to three months carried out with financial institutions headquartered in countries referred to in art. 19, item VII, with which financial statements are not prepared on a consolidated basis, provided that they are not subject to a special regime or similar abroad, and contracted in:

  • a) national currency; or

  • b) local currency in each of the countries referred to in art. 19, item VII;

............................................................" (NR)

"Art. 23. ........................................................

.................................................................. II - operations with financial institutions headquartered in the countries referred to in art. 19, item VII, with which financial statements are not prepared on a consolidated basis, provided that they are not subject to a special regime or similar abroad; ............................................................" (NR)

"Art. 24. ........................................................ § 1 ............................................................. ..................................................................

• IV - present a sum of current exposures with the same counterparty lower than:

  • a) R$1.500.000,00 (one million five hundred thousand reais), when the counterparty is a natural person; or

  • b) R$3.000.000,00 (three million reais), when the counterparty is a small-sized legal entity under private law.

§ 2 ............................................................ ..................................................................

• II - small-sized, the counterparty with annual gross revenue lower than R$15.000.000,00 (fifteen million reais).

............................................................” (NR)

“Art. 27. An FPR of 300% (three hundred percent) must be applied to tax credits arising from income tax loss and negative base of social contribution on net income and those originating from that contribution related to calculation periods ended by 31 December 1998, calculated under the terms of art. 8 of Provisional Measure No. 2.158-35, of 24 August 2001, not deducted from the PR, under the terms of the regulations in force.” (NR)

“Art. 36. ........................................................ .................................................................. § 3 ............................................................. ..................................................................

• VI - transfers of discounts on payroll or on retirement and death pension benefits, made by federal government institutions of the legislative, executive, judicial branch or by the Federal Public Prosecution Service” (NR)

• .................................................................

§ 5 The requirement provided for in subparagraph “e” of item V of § 3 does not apply to National Treasury securities received as guarantee of the principal of credit operations renegotiated under Resolution No. 2.471, of 26 February 1998, as long as such securities are not subject to negotiation under the terms of subparagraphs “a” and “b” of item IV of the Annex to the mentioned resolution. (NR)

“Art. 37. ........................................................ ..................................................................

• IX - guarantee of the countries and central banks referred to in art. 19, item VII; and

• X - deposit of securities issued by the entities referred to in art. 19, item VII.

• ..................................................................

§ 7 ............................................................. ..................................................................

• II - financial institutions and other institutions authorized to operate by the Central Bank of Brazil, as well as financial institutions headquartered in the countries referred to in art. 19, item VII;

• ............................................................” (NR)

“Art. 39. ........................................................ ..................................................................

• III - deposits of securities issued by the entities referred to in art. 23, items I and II, that cumulatively meet the following requirements:

• .................................................................

• VI - transfers of payroll discounts referred to in art. 36, § 3, item VI, linked to payroll-deductible credit operations.” (NR)

Art. 2 This Circular enters into force on the date of its publication.

Art. 3 Item IX of art. 21, arts. 26 and 28, items I and II of art. 38 and the sole paragraph of art. 39 of Circular No. 3.644, of 4 March 2013, are revoked.

Luiz Awazu Pereira da Silva Director of Regulation