Circular RUNOR 1-329 and OPASI 2-206: Mandatory Issuance and Placement of Debt. Modifications.

BANCO CENTRAL DE LA REPUBLICA ARGENTINA

COMUNICACION "A" 2886 29/03/99

TO FINANCIAL ENTITIES:

Ref.: Circular
RUNOR 1-329.
OPASI 2-206.
Mandatory Issuance and Placement of Debt. Modifications.

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

1. Replace point 1.2. of Section 1. of the rules on mandatory issuance and placement of debt, with the following:

   "1.2. Periodicity.
   Between each issuance and placement, a period not exceeding twelve months must elapse, counted from the day following the day on which a debt placement has effectively concluded under the terms established in these rules."

2. Replace Section 4. of the rules on mandatory issuance and placement of debt, with the following:

   "Section 4. Alternative Procedure.
   4.1. Utilization.
   Entities may opt not to issue debt, as provided in these rules, with the effects established in point 4.2.
   4.2. Effects.
   4.2.1. Automatic increase of one percentage point in the minimum liquidity requirements, except for obligations with terms exceeding 365 days, starting from the month following the month in which the maximum term provided for in point 1.2. of Section 1. of these rules expires.
   4.2.2. Automatic increase in the minimum capital requirement for credit risk, which, if greater than the basic requirement, must be integrated starting from the last day of the month following the month in which the maximum term provided for in point 1.2. of Section 1. of these rules expires. To this effect, the result of the expression referred to in point 3.1. of Section 3. of the rules on minimum capitals of financial entities will be multiplied by 1.05.
   These higher requirements will expire the month following the month in which the entity effectively carries out a placement as provided in these rules, upon demonstration of this circumstance to the Superintendence of Financial and Exchange Entities."

3. Incorporate as Section 5. of the rules on mandatory issuance and placement of debt, the following:

   "Section 5. Sanctions.
   5.1. Serious Offense.
   For the purposes of applying the provisions of Article 41 of the Financial Entities Law, any trick or action that, in the judgment of the Superintendence of Financial and Exchange Entities, implies, directly or indirectly, circumventing compliance with these provisions, will be considered a serious offense. It will be presumed that such intent exists, among other situations, when the existence of assets (cash, securities, loans, other credits from financial intermediation, etc.) is verified, with respect to holders who, in turn, are holders of debt placed by the entity, either directly or indirectly.
   5.2. Consequences.
   The verification of these circumstances will determine, in addition, the following consequences:
   i) The automatic increase of three additional percentage points in the minimum liquidity requirements. ii) The automatic increase in the minimum capital requirement for credit risk referred to in point 4.2.2., with the caveat that in these cases the coefficient to be used will be 1.10. These higher requirements will expire the month following the month in which the entity regularizes the situation as provided in these rules, to the satisfaction of the Superintendence of Financial and Exchange Entities."

4. Establish that the alternative procedure referred to in Section 4. of the rules on mandatory issuance and placement of debt (text according to this communication) will apply starting from 1.6.99.
   Until 31.5.99, the non-issuance and placement of debt under the conditions established in that regime will not be considered a breach."

In attachment, we send you the sheets that, due to the provisions in points 1 to 3 of the resolution transcribed above, correspond to be incorporated into the ordered text of the rules issued by this Institution in this matter, in replacement of those previously provided.

We greet you very attentively.

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

ANNEX: 10 sheets.

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B.C.R.A.	TEXT ORDERED OF THE RULES ON MANDATORY ISSUANCE
	AND PLACEMENT OF DEBT
+------------+---------------------------------------------------+

• Index
  Section 1. Requirement.
  1.1. Minimum Amount.
  1.2. Periodicity.
  1.3. Issuance.
  Section 2. Exclusions.
  Section 3. Placement Modalities.
  3.1. Debt Instruments.
  3.2. Issuance of Shares.
  3.3. Controlling Entities.
  3.4. Sworn Statement.
  3.5. Non-Computable Placement.
  Section 4. Alternative Procedure.
  4.1. Utilization.
  4.2. Effects.
  Section 5. Sanctions.
  5.1. Serious Offense.
  5.2. Consequences.
  Section 6. Other Provisions.
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	Mandatory Issuance and Placement of Debt
B.C.R.A.	---------------------------------------------------
	Section 1. Requirement.
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1.1. Minimum Amount.
Financial entities must issue and place debt equivalent to 2% of the sum of capital and accrued interest on deposits -in national and foreign currency and securities- registered on the last day of the second month prior to the month in which the issuance is carried out.

1.2. Periodicity.
Between each issuance and placement, a period not exceeding 12 months must elapse, counted from the day following the day on which a debt placement effectively concludes under the terms established in these rules.

1.3. Issuance.
The issuance will be carried out under freely agreed conditions, except that:
1.3.1. The duration cannot be less than 2 years, considering the weighted average useful life resulting from weighting the number of days between the date the term calculation is made and the maturity of each of the future services to be paid, in concept of capital and interest, as appropriate, by the proportion that represents the economic value of each of them in relation to the economic value of the instrument -net present value of future cash flows, discounted at its internal rate of return-.

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	Mandatory Issuance and Placement of Debt
B.C.R.A.	---------------------------------------------------
	Section 1. Requirement.
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1.3.2. They cannot be prepaid, unless 2 years have elapsed since the issuance or, in its absence, if express authorization is obtained from the Superintendence of Financial and Exchange Entities based on prevailing market conditions.

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	Mandatory Issuance and Placement of Debt
B.C.R.A.	---------------------------------------------------
	Section 4. Alternative Procedure.
+------------+---------------------------------------------------+
4.1. Utilization.
Entities may opt not to issue debt, as provided in these rules, with the effects established in point 4.2.

4.2. Effects.
4.2.1. Automatic increase of one percentage point in the minimum liquidity requirements, except for obligations with terms exceeding 365 days, starting from the day following the month in which the maximum term provided for in point 1.2. of Section 1. of these rules expires.
4.2.2. Automatic increase in the minimum capital requirement for credit risk, which, if greater than the basic requirement, must be integrated starting from the last day of the month following the month in which the maximum term provided for in point 1.2. of Section 1. of these rules expires. To this effect, the result of the expression referred to in point 3.1. of Section 3. of the rules on minimum capitals of financial entities will be multiplied by 1.05.
These higher requirements will expire the month following the month in which the entity effectively carries out a placement as provided in these rules, upon demonstration of this circumstance to the Superintendence of Financial and Exchange Entities.

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	Mandatory Issuance and Placement of Debt
B.C.R.A.	---------------------------------------------------
	Section 5. Sanctions.
+------------+---------------------------------------------------+
5.1. Serious Offense.
For the purposes of applying the provisions of Article 41 of the Financial Entities Law, any trick or action that, in the judgment of the Superintendence of Financial and Exchange Entities, implies, directly or indirectly, circumventing compliance with these provisions, will be considered a serious offense. It will be presumed that such intent exists, among other situations, when the existence of assets (cash, securities, loans, other credits from financial intermediation, etc.) is verified, with respect to holders who, in turn, are holders of debt placed by the entity, either directly or indirectly.

5.2. Consequences.
The verification of these circumstances will determine, in addition, the following consequences:
i) The automatic increase of three additional percentage points in the minimum liquidity requirements. ii) The automatic increase in the minimum capital requirement for credit risk referred to in point 4.2.2., with the caveat that in these cases the coefficient to be used will be 1.10.

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	Mandatory Issuance and Placement of Debt
B.C.R.A.	---------------------------------------------------
	Section 5. Sanctions.
+------------+---------------------------------------------------+ These higher requirements will expire the month following the month in which the entity regularizes the situation as provided in these rules, to the satisfaction of the Superintendence of Financial and Exchange Entities.

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	Mandatory Issuance and Placement of Debt
B.C.R.A.	---------------------------------------------------
	Section 6. Other Provisions.
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6.1. In cases not provided for, the rules established with a general character according to the instrument and the conditions set to comply with this regime will apply, as appropriate.

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ORIGIN OF THE PROVISIONS INCLUDED IN THE
B.C.R.A. TEXT ORDERED OF THE RULES ON MANDATORY ISSUANCE AND
PLACEMENT OF DEBT
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NEW T.O.
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Section
---------+-------+------+-------+-------+------+--------------
1.
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1.
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1.
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1.
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2.
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2.
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3.
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3.
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3.
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3.
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NEW T.O.	ORIGIN RULE	Observations
--------------------+-------------------------	--------------
Section	Point	Para	Comm.	Point	Para
---------+-------+------+-------+-------+------+--------------
3.	3.1.3.		"A" 2494	4.3.
---------+-------+------+-------+-------+------+--------------
3.	3.1.3.1.		"A" 2653	5.	1st	Incorporates
						interpretative
						declaration.
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3.	3.1.3.2.		"A" 2653	5.	2nd
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3.	3.1.4.		"A" 2494	4.4.	1st
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3.	3.1.5.		"A" 2494	4.4.	2nd
---------+-------+------+-------+-------+------+--------------
3.	3.2.		"A" 2494	4.	4th	According to
						Comm.
						"A" 2653,
						point 4.
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3.	3.3.		"A" 2494	4.	5th	According to
						Comm.
						"A" 2653,
						point 4.
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3.	3.4.		"A" 2494	4.	2nd & 3rd
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3.	3.5.		"A" 2653	5.	3rd
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4.	4.1.		"A" 2886
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4.	4.2	last	"A" 2886
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4.	4.2.1.		"A" 2886
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4.	4.2.2.		"A" 2886
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5.	5.1.	1st	"A" 2494	5.3.	1st	Modified
						by Comm.
						"A" 2886,
						point 3.
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NEW T.O.	ORIGIN RULE	Observations
--------------------+-------------------------	--------------
Section	Point	Para	Comm.	Point	Para
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5.	5.1.	2nd	"A" 2494	5.3.	2nd	Modified
						by Comm.
						"A" 2886,
						point 3.
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5.	5.2.	1st	"A" 2494	5.3.	3rd & 4th	Modified
						by Comm.
						"A" 2886,
						point 3.
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5.	5.2.	2nd	"A" 2886
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6.	6.1.		"A" 2494	7.
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