Circular OPASI 2-358: Norms on Application of Deposit Guarantee Insurance System. Reduction of Normal Contribution

"2004 - Year of the Argentine Antarctic"
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
COMMUNICATION “A” 4206 14/09/2004
TO FINANCIAL ENTITIES:
Ref.: Circular
OPASI 2 - 358
Norms on “Application of the Deposit Guarantee Insurance System”. Reduction of the normal contribution.

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

“- Substitute, with effect from the contribution due in September 2004, point 2. of the norms on “Application of the Deposit Guarantee Insurance System” with the following:

“2. Normal Contribution.
Entities included in the Financial Entities Law must allocate monthly to the Deposit Guarantee Fund (FGD) a normal contribution equivalent to 0.02% of their monthly average of daily balances of the items listed in point 5.1., registered in the second month immediately preceding. For these purposes, the Banco de la Nación Argentina will adhere to what is provided in the second paragraph of Article 6 of Decree 540/95 (text according to Decree 1292/96 - Article 3). The Central Bank of the Republic Argentina may require the integration, as an advance, of the equivalent of up to twenty-four (24) minimum normal contributions, with a notice of no less than thirty (30) calendar days, to cover the Fund's resource needs.”

Likewise, based on what was previously established by Executive Power Decrees No. 32/01 and 214/02, it is necessary to update point 8.2. of Section 8 of the aforementioned regulatory body.
We send you the sheets that, in replacement of those previously provided, must be incorporated into the ordered text of the norms on “Application of the Deposit Guarantee Insurance System”.
We salute you very attentively.

BANCO CENTRAL OF THE REPUBLICA ARGENTINA
Ana María Lemmi
Submanager of Emission of Norms
Alfredo A. Besio
Manager of Emission of Norms

ANEXO

B.C.R.A. APPLICATION OF THE DEPOSIT GUARANTEE INSURANCE SYSTEM Version: 5th COMMUNICATION “A” 4206 Validity:
01/09/2004

1. Shareholder Trust of SEDESA.
   The participation in the trust acting as shareholder of the company Seguro de Depósitos S.A. (SEDESA) arises from providing the contribution made by each entity regarding the contributions collected from the entire system, corresponding to each calendar year. The non-exercise of the option to participate by an entity will determine the proportional increase in the participation of the other entities.

2. Normal Contribution.
   Entities included in the Financial Entities Law must allocate monthly to the Deposit Guarantee Fund (FGD) a normal contribution equivalent to 0.02% of their monthly average of daily balances of the items listed in point 5.1., registered in the second month immediately preceding. For these purposes, the Banco de la Nación Argentina will adhere to what is provided in the second paragraph of Article 6 of Decree 540/95 (text according to Decree 1292/96 - Article 3). The Central Bank of the Republic Argentina may require the integration, as an advance, of the equivalent of up to twenty-four (24) minimum normal contributions, with a notice of no less than thirty (30) calendar days, to cover the Fund's resource needs.

3. Additional Contribution.
   In addition to the normal contribution referred to in point 2., entities must make an additional differentiated contribution based on the result obtained from weighting the following factors, according to the methodology contained in point 7.

3.1. The rating assigned to the entity according to the evaluation carried out by the Superintendence of Financial and Exchange Entities.

3.2. The ratio of excess integration of computable patrimonial responsibility regarding the minimum capital requirement. To this effect, computable patrimonial responsibility will be added to the provisions for risk of uncollectibility constituted in excess of the minimums established in the pertinent norms.

3.3. The quality of the active portfolio measured by:
3.3.1. Minimum provisions required for risk of uncollectibility regarding financings.
3.3.2. Computable assets to determine the minimum capital required, weighted according to what is established in the norms on “Minimum capitals of financial entities”, regarding total assets.

B.C.R.A. APPLICATION OF THE DEPOSIT GUARANTEE INSURANCE SYSTEM Version: 6th COMMUNICATION “A” 4206 Validity:
14/09/2004

7.2. Entities without “CAMELS” rating.
As long as the rating of the Superintendence of Financial and Exchange Entities (“CAMELS”) is not available, the calculation of the correction index will arise from the following expression:
Ic = {(Ipr/f + Iar/a)/2} - Irpc/Kmin
For its application, the definitions of the terms according to point 7.1. will be taken into account.

7.3. Transitional provisions.
For the determination of the additional contribution - calculation of the correction index “Ic” -, the value of the index to be used from the contribution corresponding to September 2003 until the contribution corresponding to March 2004 regarding the ratio RPC/minimum capital requirement - indicator Irpc/Kmin - will be equal to 0. Likewise, from the contribution corresponding to September 2003 until the contribution corresponding to August 2004, the correction index “Ic” will be calculated according to what is provided in point 7.2., applying from September 2004 the expression provided in point 7.1. for entities with “CAMELS” rating and the corresponding value of the index of the indicator “Icamels”, insofar as the entities have ratings subsequent to June 2003. The eventual differences that arise regarding the contributions already made will be compensated in the settlement of the contribution due on 12.11.03 and subsequent ones until total absorption; this last criterion will be applied when the resulting readjustments yield a balance in favor of the entities.

8. Applicable Legislation.
   8.1. Law 24.485 (*).
   Article 1: The Deposit Guarantee Insurance System is created, which will be limited, mandatory, and onerous, with the object of covering the risks of bank deposits, in a subsidiary and complementary manner to the system of privileges and protection of deposits established by the Financial Entities Law, without compromising the resources of the Central Bank of the Republic Argentina nor the National Treasury. The Central Bank of the Republic Argentina is authorized to organize and put into operation the system created by this article.
   When the Central Bank of the Republic Argentina orders the total or partial suspension of operations or the revocation of the authorization to function of a financial entity, the Deposit Guarantee Insurance System must order the reimbursement to its holders of the sums deposited in the special accounts for the crediting of remuneration, enabled by virtue of the provisions contained in Article 124 of Law 20.744 (text ordered in 1976), within a period not exceeding five (5) business days from the date of the suspension or revocation of the authorization to function.

8.2. Decree 540/95 ().
Article 1: The “DEPOSIT GUARANTEE FUND” (FGD) is created with the purpose of covering bank deposits with the scope provided in this Decree.

() It is ordered the constitution of the company “SEGURO DE DEPOSITOS SOCIEDAD ANONIMA” (SEDESA) with the exclusive object of exercising the functions of trustee that the NATIONAL STATE or the CENTRAL BANK OF THE REPUBLICA ARGENTINA entrusts to it at the appropriate time. () Published in the Official Bulletin of 18.4.95. With the modification of Law 25.089 (B.O. 14.05.99). () With the modifications of Decrees 1292/96, 1127/98, 1292/99, 32/01 and 214/02. (*) Decree 32/01. Validity: 26/12/01.

B.C.R.A. APPLICATION OF THE DEPOSIT GUARANTEE INSURANCE SYSTEM Version: 5th COMMUNICATION “A” 4206 Validity:
14/09/2004

Article 13: The guarantee will cover the return of demand or time deposits up to the (*) sum of pesos THIRTY THOUSAND ($ 30.000).
THE CENTRAL BANK OF THE REPUBLICA ARGENTINA may dispose, at any time and with general character, the modification of that coverage amount of the guarantee system, based on the evolution experienced by the financial system consolidation process and other indicators it deems appropriate. Deposits for amounts superior to the coverage limit are also included in the guarantee regime up to that maximum limit.

Article 13 (bis): SEDESA may issue non-endorsable nominative securities for the purpose of offering them to depositors in payment of the deposit guarantee, if it does not have sufficient funds for these effects. These securities, whose conditions will be established with general character by the Central Bank of the Republic Argentina, must be accepted by financial entities in order to constitute deposits under the conditions stipulated by said regulation.

Article 14: The receipt by depositors of the sums disbursed by SEDESA with the FGD's availability implies the legal subrogation in favor of SEDESA in the collection rights in the liquidation or bankruptcy of the entity, with the privileges corresponding to the depositors and with priority of collection over them up to the concurrence of the sums paid by SEDESA according to what is provided in Article 13 of this Decree.

Article 15: The guarantee applies under equal conditions for natural and legal persons. To determine the amount reached by the coverage and its return to the depositor, the total of deposits registered by each person in the entity on the date of the revocation of their authorization to function will be computed. In accounts and deposits in the name of TWO (2) or more persons, it will be understood that only one of them enjoys the guarantee, prorated among the participants.

Article 16: (*)

Article 17: The guarantee will be effective in a subsidiary and complementary manner to the reimbursement of deposits by applying the privileges established by the Financial Entities Law, within THIRTY (30) business days counted from the day following the revocation of the authorization to function of the entity, insofar as the depositors meet the established requirements and the FGD has availability. At the request of SEDESA, the CENTRAL BANK OF THE REPUBLICA ARGENTINA may authorize the extension of said period when the quantity of beneficiaries in liquidation proceedings justifies it.
When the FGD's resources are insufficient to attend the payment of guaranteed sums, the reimbursement will be made pro rata of the available funds. The balance will be settled within THIRTY (30) days counted from the date the FGD informs the existence of financial availability. In these situations and when there is more than one entity whose authorization has been revoked, the precedence for reimbursement will be governed by the chronological order resulting from () Decree 1127/98. Validity: 28.9.98 () Decree 214/02. Validity: 03.02.02 () Repealed by Decree 1127/98.

B.C.R.A.
ORIGIN OF THE PROVISIONS INCLUDED
IN THE ORDERED TEXT OF THE NORMS ON
APPLICATION OF THE DEPOSIT GUARANTEE INSURANCE SYSTEM

ORDERED TEXT SOURCE NORM
Point Paragraph. Com. Annex Point Paragraph
Observations

1. “A” 2337 I 1. 1° and 2°
   1° “A” 2337 I 2. 1° S/Dec. 1292/96, Com. “A”
   2807, “A” 3358 and “A” 4206

2° “A” 2337 I 2. 2° S/Dec. 1292/96
3. 1° “A” 2337 I 3. 1°
3.1. “A” 2337 I 3.1.
3.2. “A” 2337 I 3.2.
3.3. “A” 2337 I 3.3.
3.3.1. “A” 2337 I 3.3.1.
3.3.2. “A” 2337 I 3.3.2.
3. 2° “A” 2337 I 3. 2°
1º “A” 2337 I 4. 3 and 2 S/Com. “B” 5806, 8th paragraph and “A” 3068 4.
2° “A” 2337 I 4. 4°
5. “A” 2337 I 6.
5.1. 1° “A” 2337 I 6.1. 1°
5.1.1. “A” 2337 I 6.1. i)
5.1.2. “A” 2337 I 6.1. ii)
5.1.3. “A” 2337 I 6.1. iii)
5.1.4. “A” 2337 I 6.1. iv)
5.1.5. “A” 2482 1. 2°
5.1.6. “B” 5806 3° S/Com. “A” 2807
5.2. “A” 2337 I 6.4. S/Com. “A” 2399
5.2.1. “A” 2337 I 6.4.1. S/Com. “A” 2399
5.2.2. “A” 2337 I 6.4.2. S/Com. “A” 2399
5.2.3. “A” 2337 I 6.3. S/Com. “A” 2777 and “A” 3358
5.2.4. “A” 2337 IV S/Dec. 540/95, art. 12, inc. c)
5.2.5. “A” 2337 I 6.2.
5.2.6. “A” 2337 IV S/Dec. 540/95, art. 12, inc. c)
5.2.7. “A” 2807 5.2.7.
5.3. “A” 2337 I 6. S/Dec. 540/95
5.3.1. “A” 2337 I 6.5.
5.3.2. “A” 2337 I 6.7. 1° S/Dec. 540/95
5.3.3. “A” 2337 I 6.7. 2° S/Dec. 540/95
5.3.4. “A” 2337 I 6.8. S/Dec. 540/95
5.3.5. “A” 2337 I 6.9.
6. “A” 2337 I 7. S/Com. “A” 2399 and 3270, and
Decree 1292/96
7. 1° “A” 2337 II 1. S/Com. “A” 2561
7.1. “A” 2337 II 1. S/Com. “A” 2561 and “A” 4040
7.2. “A” 2337 II 2. S/Com. “A” 2561
7.3. “A” 4040
8. “A” 2807 II and III
8.1. “A” 2807 II S/Law 25.089
8.2. “A” 2807 III S/Dec. 1292/99 and Com. “A”
4206