Circular RUNOR 1-311: Reciprocal Guarantee Societies Registered with the Central Bank. Establishment of the Risk Fund. Weighting of Guarantees. Consolidated Text

"1998 - Year of the Municipalities" BANCO CENTRAL DE LA REPUBLICA ARGENTINA __________________________________________________________________ COMMUNICATION "A" 2806 18/11/98 __________________________________________________________________ TO FINANCIAL ENTITIES:
Ref.: Circular
RUNOR 1 - 311.
Reciprocal Guarantee Societies registered with the Central Bank. Establishment of the risk fund. Weighting of guarantees. Consolidated text

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

"- Substitute, with effect from 12/01/98, point 2.1. of the resolution disseminated by Communication "A" 2411, with the following:

"2.1. Maintain a risk fund equivalent to 25% of the guarantees granted. To this end, the risk fund resulting from the last quarterly balance that has an opinion from an external auditor registered in the "Registry of auditors" of the Superintendence of Financial and Currency Entities will be considered. For the determination of the minimum amount required as risk fund, it will be necessary to consider the guarantees granted to SMEs, weighted by the application to each of them of the factors established in the "Table of risk weighting factors", inserted in
Section 4. of the norms on minimum capital of the
financial entities, taking into account the existence or not of counter-guarantees and, if any, their nature."

In attachment we send you the consolidated text to date of the current norms in this matter.

We greet you very respectfully.

BANCO CENTRAL DE LA REPUBLICA ARGENTINA Juan Carlos Isi Alfredo A. Besio Submanager of Norms Manager of Norms for for Financial Entities Financial Entities

ANNEX

+----------+--------------------------------------------------+ I I CONSOLIDATED TEXT OF THE NORMS ON I I B.C.R.A. I RECIPROCAL GUARANTEE SOCIETIES I (ART. 80 OF LAW 24.467) I +----------+--------------------------------------------------+

• Index -

1. Registration with the Central Bank.
2. Requirements.
   2.1. Risk fund.
   2.1.1. Requirement.
   2.1.2. Determination of the minimum amount.
   2.1.3. Investment.
   2.1.4. Custody.
   2.2. Individual limit.
   2.3. Prohibition.
   2.4. Information to the Central Bank.
   2.5. Non-compliance.
   +-----------+--------------------+------------------+---------+ IVersion:1a.ICommunication"A" 2806IVigence: 18.11.98IPage 1 I +-----------+--------------------+------------------+---------+

+----------+--------------------------------------------------+ I B.C.R.A. I RECIPROCAL GUARANTEE SOCIETIES I (ART. 80 OF LAW 24.467) I +----------+--------------------------------------------------+

1. Registration with the Central Bank.
   1.1. Reciprocal guarantee societies interested in
   having the guarantees they grant enjoy, by the part of the financial entities, the specific treatment provided for SME financings must manage their registration with the Central Bank of the Argentine Republic.
   1.2. Registration will be carried out in the pertinent
   registry, enabled in the Superintendence of Financial and Currency Entities.
2. Requirements.
   Societies registered in the aforementioned Registry must observe -at all times- the following conditions:
   2.1. Risk fund.
   2.1.1. Requirement.
   The amount equivalent to 25% of the guarantees granted, as derived from the last quarterly balance that has an opinion from an external auditor registered in the "Registry of auditors" of the Superintendence of Financial and Currency Entities.
   2.1.2. Determination of the minimum amount.
   Guarantees granted to
   SMEs will be computed, weighted by the application to each one of them of the factors established in the "Table of risk weighting factors", inserted in
   Section 4. of the norms on minimum capital
   of financial entities, taking into account the existence or not of counter-guarantees and, if any, their nature. +-----------+--------------------+------------------+---------+ IVersion:1a.ICommunication"A" 2806IVigence: 18.11.98IPage 1 I +-----------+--------------------+------------------+---------+

+----------+--------------------------------------------------+ I B.C.R.A. I RECIPROCAL GUARANTEE SOCIETIES I (ART. 80 OF LAW 24.467) I +----------+--------------------------------------------------+
2.1.3. Investment.
It must be invested in the assets pre- seen by art. 74 of Law 24.241 (for investments of retirement and pension funds), within the limits and other conditions established for it, according to the criteria disseminated by the Superintendence of Administrators of Retirement and Pension Funds.
2.1.4. Custody.
Investments must be maintained in custody in some of the banks enabled to perform that function regarding the investments of retirement and pension funds, or in banks abroad with international rating "AA" or higher, granted by one of the rating agencies admitted by the norms on evaluation of financial entities.
2.2. Individual limit.
The total of guarantees granted to a participating member may not exceed 2.5% of the risk fund of the granting society, corresponding to the last quarterly balance with external auditor opinion.
2.3. Prohibition.
Guarantees may not be granted to affiliated members, for which purpose the norms that govern operations with affiliated clients of the financial entities will be taken into account.
2.4. Information to the Central Bank.
Comply regularly with the informative regime +-----------+--------------------+------------------+---------+ IVersion:1a.ICommunication"A" 2806IVigence: 18.11.98IPage 2 I +-----------+--------------------+------------------+---------+

+----------+--------------------------------------------------+ I B.C.R.A. I RECIPROCAL GUARANTEE SOCIETIES I (ART. 80 OF LAW 24.467) I +----------+--------------------------------------------------+ established for this purpose, subject to the supervision of the Central Bank of the Argentine Republic.
2.5. Non-compliance.
Departure from any of these conditions will imply the immediate deregistration of the society from the Registry. +-----------+--------------------+------------------+---------+ IVersion:1a.ICommunication"A" 2806IVigence: 18.11.98IPage 3 I +-----------+--------------------+------------------+---------+

+----------+----------------------------------------------+ I I ORIGIN OF THE PROVISIONS INCLUDED IN THE I I B.C.R.A. I CONSOLIDATED TEXT OF THE NORMS ON I RECIPROCAL GUARANTEE SOCIETIES I +----------+----------------------------------------------+ +--------------+------------------------------------------+ I NEW T.O. I ORIGIN NORM I +-------+------+--------+--------+------+-----------------+ I Point I Par. IComm."A" I Point I Par. I Observations I +-------+------+--------+--------+------+-----------------+ I 1. I I"A" 2411I 1. I 1.1. I I"A" 2411I 1. I IIncludes formal modifica-I I tions I 1.2. I I"A" 2411I 1. I IIncludes formal modifica-I I tions I +-------+------+--------+--------+------+-----------------+ I 2. I I"A" 2411I 2. I 2.1. I I"A" 2411I 2.1. I 2.1.1.I I"A" 2411I 2.1. I1st and 2nd I 2.1.2.I I"A" 2411I 2.1. I 3rd IAccording to Communica- I I tion "A" 2806. I I 2.1.3.I I"A" 2411I 2.3. I 1st I 2.1.4.I I"A" 2411I 2.3. I 2nd I 2.2. I I"A" 2411I 2.2. I 1st I 2.3. I I"A" 2411I 2.2. I 2nd I 2.4. I I"A" 2411I 2.4. I 1st I 2.5. I I"A" 2411I 2.4. I 2nd I +-------+------+--------+--------+------+-----------------+

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