Circular OPASI 1-69, OPRAC 1-79 and REMON 1-251: Deposits in Foreign Currency

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION "A" 725
25/07/85

TO THE FINANCIAL INSTITUTIONS:

Ref.: Circular PASSIVE OPERATIONS - OPASI - 1 - 69; Circular ACTIVE OPERATIONS - OPRAC - 1 - 79; Circular MONETARY REGULATIONS - REMON - 1 - 251. Deposits in foreign currency.

We address you to inform you that this Institution adopted the following resolution:

"1 - Approve the rules on the acceptance of deposits, granting of loans by the Central Bank and placement of resources in foreign currency, which are attached as Annex and form part of this resolution.

2 - Authorize the entities registered in the Registry referred to in point 6. of the attached regulations to accept deposits in United States dollars for the account and order of the Central Bank, under the conditions set forth in the aforementioned regulations.

3 - Repeal the provisions contained in point 1.4., Chapter II of Circular RE-MON - 1 (Communication "A" 10); in point 1.8., Chapter I of Circular OPRAC - 1 (Communication "A" 49); in point 8., Chapter I of Circular OPASI - 1 (Communication "A" 59), and in Communication "A" 643.

4 - This measure shall be effective as of 1.8.85."

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Alfredo A. Besio
Manager of Standards for
Financial Institutions
Néstor J. Taro
Deputy General Manager

ANNEXES

B.C.R.A.
RULES FOR THE ACCEPTANCE OF DEPOSITS, GRANTING OF LOANS BY THE CENTRAL BANK AND PLACEMENT OF RE- SOURCES IN FOREIGN CURRENCY.
Annex I to
Com. "A" 725

1. Demand accounts.

1.1. Entities authorized to carry out operations in foreign currency in category "C" are enabled to receive the deposits referred to in this point.

1.2. They may only be constituted in favor of agencies and departments dependent on the National, provincial and municipal governments; non-financial public enterprises; insurance companies, whatever their legal nature, and international organizations, embassies, legations and consulates accredited to the National government, as well as their officials with diplomatic status.

1.3. The accounts may be opened in the usual forms and modalities of use. Information about the holders and their addresses must be stated in the opening application.

1.4. Requests for return, for partial or total amounts, of deposited funds must be satisfied at the time they are made, without prior notice being required and in the same class of currency in which they were constituted.

1.5. The documents used for the withdrawal of deposits must have the characteristics of a receipt. The entities may also process instructions received in writing from the account holders that signify a withdrawal of funds.

1.6. The entities must maintain minimum cash reserves of 100% of these deposits. For this purpose, the provisions contained in Chapter II of Circular REMON - 1 (Communication "A" 10) shall be observed.

1.7. These deposits are excluded from the guarantee established in article 56 of Law 21.526, an aspect that must be expressly stated in the documents of relationship with the clientele.

2. Fixed-term deposits for the account and order of the Central Bank of the Argentine Republic.

2.1. The deposits must be constituted, exclusively in United States dollars, in the entities listed in the Registry established in point 6.

2.2. The Central Bank shall be responsible for printing the certificates to be used, which shall be issued for the following values: u$s 500, u$s 1.000, u$s 5.000 and u$s 10.000. The first of these denominations shall be used exclusively for operations for that fraction. Likewise, the certificates shall be countersigned by two authorized officials of the entity receiving the funds at the time they are delivered to the depositor.

2.3. For the acceptance of deposits, the intervening entities shall be recognized a remuneration in australes, charged to the Central Bank.

2.4. The registered entities shall transfer daily the amount of the deposited principal, net of reimbursements (principal or interest) to depositors, to the account of the Central Bank opened at the Banco de la Nación Argentina - New York Branch under the name "Communication "A" 725", excluding the item referred to in point 5, of which they shall inform this Institution with equal periodicity.

2.5. The registered entities must request from the Central Bank the provision of the certificates referred to in point 2.2. according to their needs. Such certificates shall be delivered to them, assuming the character of depositaries subject to the legal responsibilities in force, with reliable record of the numbering and value of each of them, registering them in a book specially enabled for that purpose according to their date of entry to the entity, correlative numbering and corresponding value. In turn, when used, they shall be removed from that registry with indication of the date, term of the operation, recognized interest rate, name of the investor and maturity date of the operation. Upon cancellation, they shall be delivered to the Central Bank, as well as those that may eventually have been annulled.

3. General conditions of fixed-term deposits for the account and order of the Central Bank.

3.1. They may be received under the modality of registered, non-transferable and transferable. In the latter case in accordance with the provisions of Law No. 20.663.

3.2. The minimum amount of each deposit is established at u$s 1.000. Higher amounts must be multiples of u$s 500.

3.3. They shall be constituted for minimum terms of 60 days and multiples of 10 days up to a maximum of 360 days. Such terms shall be extended in the terms that are necessary when the maturities occur on non-banking days.

3.4. The financial entities referred to in point 2.1. may intermediate or purchase transferable certificates, applying only United States dollars, provided that from the date of issue or last negotiation or transfer, whatever the reason originating them, a period of no less than 30 days has elapsed. For the purposes of this intermediation or purchase, the endorsers must record the dates on which they formalize the endorsements.

3.5. Insofar as it is not provided for in these requirements, the provisions governing Circular OPASI - 1, Chapter I, Deposits, points 3.1.1. to 3.1.12. inclusive, shall apply, with the replacement of point 3.1.4.1. by the following: "Constituted in the name of other financial entities of the country or abroad", and 3.2.2. and 3.2.3.

B.C.R.A.	RULES FOR THE CAPTATION OF DEPOSITS, GRANTING OF LOANS BY THE CENTRAL BANK AND PLACEMENT OF RESOURCES IN FOREIGN CURRENCY.	Annex I to Com. "A" 725

3.6. Interest rates.

3.6.1. The interest rates to be recognized for deposits shall be those determined by the Central Bank.

3.6.2. They shall be calculated from the date of deposit and paid at maturity, in accordance with the agreed conditions, using the divisor of 365 days.

4. Loans from the Central Bank and application of resources.

4.1. Registered entities may obtain loans from this Institution, whose average monthly use shall not exceed 40% of the monthly average of deposits captured at fixed term. The interest rate shall be set by the Central Bank. For this purpose, they shall submit requests for funds in accordance with the operating regime to be implemented separately, accompanying each request with the detail of the operations to be financed. The funds must be destined for the granting of credits to finance foreign trade operations - exports and imports - up to 180 days term. Interest rate: up to the maximum established by the Central Bank.

4.1.1. The resources enabled for financing exports must be acquired from the exporters by the intervening entities and simultaneously sold to the Central Bank. The cancellation of these loans shall be effected through the transfer of the foreign currency resulting from the export in favor of the Central Bank.

4.1.2. When the funds are applied to the financing of imports, the assigned foreign currency shall be transferred to the account indicated by the entity. For cancellation, the transfer to the Central Bank of the foreign currency acquired in the market on the occasion of the import shall be required.

4.2. Entities may submit additional requests for funds to be applied to the operations provided for in point 4.1. and other destinations admitted by the Central Bank.

4.3. Registered entities may have at their disposal a special loan equivalent to 10% of the monthly average capital of the certificates in force and issued through their intermediation, destined for the purchase of certificates in the secondary market. Interest rate: the one set by the Central Bank.

4.4. Indebtedness limit. The debt balance in respect of these loans may not exceed 50% of the computable equity responsibility reported by the entity in the last formula 2966 submitted to this Institution before each request for funds. Furthermore, the aforementioned balances shall be computable for the purposes of the global indebtedness ratio referred to in point 1. of Annex I to Communication "A" 646.

4.5. For amounts used in excess of the limit established in point 4.4., entities shall pay, with effect from the first day of the month following that in which the excess use is recorded, a charge equivalent to 0.55 times the maximum rediscount rate in force for the respective month. For this purpose, the seller's exchange rate to clients for transfers of the Banco de la Nación Argentina corresponding to the last business day of the month in which the excess is recorded shall be applied to the declared excess use.

4.6. Entities may not grant loans with allocation to resources from this origin to related natural and legal persons.

4.7. As guarantee of the loans granted in accordance with points 4.1., 4.2. and 4.3., entities shall assign documents from their active portfolio originated in this operation and/or purchased Central Bank deposit certificates. For this purpose, they shall sign the guarantee letter in original and two copies, in accordance with the model attached as Annex II. This document shall be sent only once together with the request for funds, accompanied by forms 2894 stating the detail of the documents and certificates given in guarantee. Within fifteen calendar days of the request for funds, they must present an external auditor's opinion regarding the collectability of the portfolio assigned in guarantee.

5. Registered entities may have at their disposal, in order to maintain sufficient dollar liquidity to meet their cash needs derived exclusively from the operation provided for in point 2., up to 5% of the monthly average capital of the certificates in force and issued through their intermediation.

When the returns of fixed-term deposits exceed the deposits of that nature, entities may request the transfer of foreign currency from the Central Bank to adequately meet the reimbursements.

6. Conditions for registration in the Registry of entities authorized to operate in the fixed-term captation system: Entities authorized to operate in foreign currency in category "C", which are not subject to restructuring plans, may request their registration in the registry established, in accordance with the following conditions:

1) Register at the time of the suspension of the regime for the captation of United States dollar deposits, a balance of such deposits exceeding 1,000,000 United States dollars, or

2) At that moment, record deposits exceeding 500,000 US dollars, of which no less than 40% (forty percent) had been allocated to pre-financing or financing exports.

B.C.R.A.	RULES FOR THE ACCEPTANCE OF DEPOSITS, GRANTING OF LOANS BY THE CENTRAL BANK AND PLACEMENT OF FUNDS IN FOREIGN CURRENCY.	Annex I to Com. "A" 725

The Central Bank of the Argentine Republic shall receive and evaluate applications that do not conform to the conditions set forth in the preceding points, taking into consideration the following elements:

• The solvency, liquidity and profitability indicators of the entity must be higher than the homogeneous average of the group to which they belong.

• No deviations in the last 6 months with respect to the rules of: a) minimum cash b) technical ratios c) minimum capital.

• The balance of deposits in australes at the end of the month prior to the submission of the application must be higher than that set by the Central Bank. For July 1985 it is set at 10 million australes.

• The normal volume of foreign trade operations at the end of the month prior to the submission of the application must be higher than the equivalent in australes of US$ 1,500,000.

  7. Transitional provision. Until the Central Bank provides the certificates referred to in point 2.2., the authorized entities shall use their own certificates authorized for the receipt of time deposits, stating that the deposit is received for and on behalf of the Central Bank of the Argentine Republic.

B.C.R.A. "MODEL OF LETTER OF GUARANTEE"
Annex II to the
Com. "A" 725

Mr. President of the
CENTRAL BANK OF THE ARGENTINE REPUBLIC
S
/
D.

Ref.: Letter of Guarantee for the loan regime in US dollars, Communication "A" 725.

We have the pleasure of addressing you in order to expressly state that we undertake and accept the following:

1. That as guarantee of the loans in US dollars that the Central Bank of the Argentine Republic may grant us under the regime of Communication "A" 725, we pledge in favor of the Central Bank of the Argentine Republic the documents and/or deposit certificates of the Central Bank purchased in the same foreign currency from our portfolio for a value that reaches or exceeds one hundred percent (100%) of the sums owed to the Central Bank of the Argentine Republic.

2. That for the documents given as guarantee, which shall be endorsed with the legend: "Value as collateral in favor of the Central Bank of the Argentine Republic", and for the purchased deposit certificates, we undertake to keep them carefully separated from the rest of the portfolio and at the disposal of the Central Bank of the Argentine Republic in a determined and individualized area of the vault of this Entity that we provide free of charge and to which the pertinent officials and inspectors of the Central Bank of the Argentine Republic shall have access.

3. That we accept the role of depositaries of the documents offered as guarantee, which we shall perform free of charge.

4. That we fully understand that any subsequent collection proceedings of the documents given as guarantee shall be at the exclusive expense and cost of this Entity, whether judicial or extrajudicial.

5. That when due to the maturity of the documents or other circumstances the minimum guarantee established in clause 1 may decrease, we undertake to replace them with other documents of the same nature as those cited in said clause, until covering the indicated minimum guarantee, within a period of 48 hours.

If such documents are not available to make the corresponding replacements, upon expiration of the indicated period and without the need for any request, the cancellation of the guaranteed loan shall automatically become due, in the same currency in which it was granted, that is, in US dollars.

6. That the list of purchased deposit certificates and documents offered as guarantee is detailed in form 2894, which is attached, numbered correlatively, which shall form an integral part of this guarantee.

When replacements of documents occur, as provided in clause 5, the pertinent substitutions shall be sent.

7. That the Central Bank of the Argentine Republic reserves the right to reject or require the replacement of any of the documents that guarantee the corresponding loan, which must be done within 48 hours of receiving the communication from the Central Bank.

8. That for the purpose of recording the date of transfer of the securities given as guarantee, we undertake to record in the Minute Book (of the Board of Directors or Board of Administration) the number of documents and securities, the total amount, their order numbers and the date and numbering of the schedules in which they are itemized.

A copy of the aforementioned schedules shall remain in the possession of this Entity at the disposal of the Central Bank of the Argentine Republic. This Minutes shall be signed by all directors and statutory auditors.

9. That we undertake to satisfy the additional guarantees that the Central Bank of the Argentine Republic may require for the debt resulting from this loan regime.

NOTE: This letter of guarantee must be signed by those who are authorized to legally bind the entity (President, Vice President, Directors or officials with enabling power; in the latter case they must attach a photocopy of the respective power of attorney).