Circular No. 4007 - Amendment to Circular 3996 Regarding LTEL-LFG Operations

CIRCULAR Nº 4.007, DE 24 DE ABRIL DE 2020

Amends Circular No. 3,996, of April 6, 2020, which provides for lending operations through the Temporary Special Liquidity Line for the acquisition of Financial Letters backed by financial assets or securities (LTEL-LFG), as set forth in Resolution No. 4,795, of April 2, 2020.

The Collegiate Board of the Central Bank of Brazil, in an extraordinary session held on April 24, 2020, based on art. 10, item V, of Law No. 4,595, of December 31, 1964, and on Resolution No. 4,795, of April 2, 2020,

RESOLVES:

Art. 1º Circular No. 3,996, of April 6, 2020, shall enter into force with the following changes:

“Art. 2º ............................................................................................................
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§ 4º Interfinancial transfers made with free resources within the National Cooperative Credit System are included in the list of operations with the characteristic of granting credit referred to in art. 5, item III, of Resolution No. 4,795, of 2020, and may, respecting the rules established in that Resolution and in this Circular, be part of the guarantee basket constituted by cooperative banks in the manner of the main text.” (NR)

“Art. 8º ............................................................................................................
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§ 4º In addition to the financial assets and securities provided for in items I, II and III of the main text, operations in the form of advances on foreign exchange contracts shall not be accepted, nor shall operations carried out with related parties, as per art. 2º of Resolution No. 4,693, of October 29, 2018, excepted, in this case, the hypotheses provided for in art. 8º of that Resolution. .........................................................................................................................” (NR)

“Art. 9º For the purposes of eligibility of the operation as collateral for the LTEL-LFG, the issuer or the debtor of the financial assets or securities referred to in art. 5º of Resolution No. 4,795, of 2020, must have a non-default index (ID) in the credit operations reported to the SCR lower than or equal to 0.05% (five hundredths of a percent), measured according to the following formula:

ID = CB48 / (CA + CB48), where:
CB48 = credits written off as loss up to 48 months in the SFN; and

Circular No. 4.007, of April 24, 2020 Page 2 of 3 CA = active portfolio in the SFN.” (NR)

“Art. 11. ..........................................................................................................
Sole Paragraph. The information available and processed in the systems of the Central Bank of Brazil until:
I - the first day of each stage of the schedule of requests for operations referred to in art. 14, § 2º, for the purpose of informing the financial institution of the value of the Total Financial Limit; II - the last day of each stage of the schedule of requests for operations, referred to in art. 14, § 2º, for the purpose of instructing the authorization procedure for the issuance of Financial Letters referred to in art. 13, II; and III - the day on which the processing of Document 3040 – Credit Risk Data has occurred, for the purpose of instructing the authorization procedure for the issuance of Financial Letters referred to in art. 13, II, in the hypothesis provided for in § 5º of art. 8º.” (NR)

“Art. 14. ..........................................................................................................
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§ 2º .................................................................................................................
I - up to 50% (fifty percent) of the amount of the Reference Equity of the conglomerate or the PLA calculated based on the Combined Balance Sheet of the Cooperative System, as applicable, in operations requested from April 27 to April 30, 2020;
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VIII - up to 50% (fifty percent) of the amount of the Reference Equity of the conglomerate, or the PLA calculated based on the Combined Balance Sheet of the Cooperative System, as applicable, respecting the limit provided for in items I and II of the main text, in operations requested from December 17 to December 21, 2020. § 3º For the purposes of this Circular, the amounts of the Reference Equity of the conglomerate, calculated in accordance with Resolution No. 4,192, of 2013, and the PLA, calculated based on the Combined Balance Sheet of the Cooperative System referred to in Resolution No. 4,151, of 2012, shall be those indicated in the last information available to the Central Bank of Brazil at the time of calculating the Total Financial Limit referred to in art. 11. § 4º The information available to the Central Bank of Brazil provided for in § 3º shall, at most, refer to:
I - 2 (two) base dates prior to the month of request for operations, in the case of the amount of the Reference Equity of the conglomerate, calculated in accordance with Resolution No. 4,192, of 2013; and

Circular No. 4.007, of April 24, 2020 Page 3 of 3 II - 2 (two) quarters prior to the month of request for operations, in the case of the PLA, calculated based on the Combined Balance Sheet of the Cooperative System referred to in Resolution No. 4,151, of 2012. § 5º The absence of information made available to the Central Bank of Brazil within the temporal limits established in § 4º prevents the granting, to the requesting financial institution, of lending operations under the LTEL-LFG. § 6º Financial institutions adhering to the LTEL-LFG and belonging to the same prudential conglomerate or the same cooperative credit system must coordinate among themselves the requests for lending operations, so as not to exceed the limits provided for in this article. § 7º With the objective of ensuring compliance with the limits provided for in this article, the Central Bank of Brazil may promote a proportional reduction in the value of operations requested by financial institutions adhering to the LTEL-LFG and belonging to the same prudential conglomerate or the same cooperative credit system.” (NR)

“Art. 25. Requests for lending operations under the LTEL-LFG may be made starting from April 27, 2020.” (NR)

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

Bruno Serra Fernandes Paulo Sérgio Neves de Souza Director of Monetary Policy Director of Supervision João Manoel Pinho de Mello Director of Organization of the Financial System and Resolution

This text does not replace the published in the DOU of 4/28/2020, Section 1, p. 33, and in Sisbacen.