Circular RUNOR 1 - 173. Reciprocal Guarantee Societies. Registration in the BCRA. Requirements to Observe (Article 80 of Law 24.467)

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
__________________________________________________________________ COMMUNICATION "A" 2411 26/01/96 __________________________________________________________________ TO FINANCIAL ENTITIES:
Ref.: Circular
RUNOR 1 - 173.
Reciprocal Guarantee Societies.
Registration in the BCRA. Requirements to observe (art. 80 of Law 24.467)

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

"1. Establish that reciprocal guarantee societies interested in having the guarantees they issue enjoy the specific treatment, by financial entities, provided for in Communication "A" 2410, must register in the Registry of Reciprocal Guarantee Societies (Law 24.467) which, for this purpose, will be kept by the Superintendence of Financial and Exchange Entities.

2. Establish that societies registered in the Registry referred to in the previous point must observe - at all times - the following conditions:

2.1. Maintain a risk fund equivalent to 25% of the guarantees issued.
To this end, the risk fund arising from the last quarterly balance sheet that has an audit report from an external auditor registered in the "Register of Auditors" of the Superintendence of Financial and Exchange Entities will be considered.

For the determination of the minimum amount required as a risk fund, it will be necessary to consider the guarantees issued to SMEs, weighted by the application to each of them of the following factors, according to the class of counter-guarantees offered:

2.1.1. first-degree mortgage 75%
2.1.2. pledge
2.1.2.1. fixed with first-degree registration or with displacement towards the society on motor vehicles (for personal or commercial use) 50%
2.1.2.2. fixed with first-degree registration or with displacement on other assets 75%
2.1.2.3. floating with registration, to the extent that it is implemented on assets that have manufacturing certificates or other documents that limit the disposal of the asset, provided they are retained until the cancellation of the assistance granted 50%
2.1.3. others and without counter-guarantees 100%

2.2. The total guarantees issued to a participating member may not exceed 2.5% of the risk fund of the issuing society corresponding to the last quarterly balance sheet with an external audit report.
Guarantees may not be agreed upon with related members, for which purpose the current guidelines disseminated through Communication "A" 2140 will be taken into account.

2.3. Have 100% of its risk fund invested in the assets provided for in art. 74 of Law 24.241 for the investments of pension and retirement funds within the limits and other conditions established for this purpose, according to the criteria disseminated by the Superintendence of Administrators of Pension and Retirement Funds.

The investments must be kept in custody in one of the banks authorized to perform that function regarding the investments of pension and retirement funds (Communication "A" 2237) or in foreign banks with an "AA" or higher rating granted by any of the international agencies mentioned in point 6. of Communication "A" 2269.

2.4. Regularly comply with the information regime established by the Superintendence of Financial and Exchange Entities and submit to the supervision of the Central Bank.

Departure from any of these premises will imply the immediate removal of the society from the Registry."

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Alfredo A. Besio Miguel A. Kiguel
Manager of Standards for Subgeneral Manager
Financial Entities Area of Economics and Finance