CMN Resolution No. 4,958 — Minimum Requirements for Reference Equity, Tier 1 and Core Capital and Additional Core Capital

Resolution No. 4,958

CMN RESOLUTION NO. 4,958, OF OCTOBER 21, 2021

Establishes the minimum requirements for Reference Equity (RE), Tier 1 and Core Capital and for the Additional Core Capital (ACC).

The Central Bank of Brazil, in accordance with Art. 9 of Law No. 4,595, of December 31, 1964, makes public that the National Monetary Council, in a session held on October 21, 2021, based on Arts. 4, items VIII and XI, of the aforementioned Law, 20, § 1, of Law No. 4,864, of November 29, 1965, in Law No. 6,099, of September 12, 1974, and 1 and 12 of Complementary Law No. 130, of April 17, 2009,

RESOLVES:

CHAPTER I

OF THE OBJECT AND SCOPE OF APPLICATION

Art. 1 This Resolution establishes the minimum requirements for Reference Equity (RE), Tier 1 and Core Capital and for the Additional Core Capital (ACC), which must be calculated by financial institutions and other institutions authorized to operate by the Central Bank of Brazil.

Sole paragraph. Excluded from the provisions of the caput:

I - consortium administrators and payment institutions, which must observe the specific regulation issued by the Central Bank of Brazil, in the exercise of their legal powers; and

I - consortium administrators, payment institutions, securities brokerage companies, securities distribution companies and currency brokerage companies, which will follow the norms issued by the Central Bank of Brazil in the exercise of their legal powers; and (Amended, effective 1/1/2025, by CMN Resolution No. 5,194, of 12/19/2024.)

II - institutions classified in Segment 5 (S5), in accordance with Resolution No. 4,553, of January 30, 2017.

CHAPTER II

GENERAL PROVISIONS

Art. 2 The institutions mentioned in Art. 1 must permanently maintain amounts of RE, Tier 1 and Core Capital in values higher than the minimum requirements established in this Resolution.

Sole paragraph. The minimum requirements mentioned in the caput must be calculated on a consolidated basis for institutions part of a prudential conglomerate, in accordance with the Accounting Plan of the Institutions of the National Financial System (Cosif).

Sole paragraph.(Revoked, effective 7/1/2023, by CMN Resolution No. 5,049, of 11/25/2022.)

§ 1 The minimum requirements mentioned in the caput must be calculated on a consolidated basis for institutions part of a prudential conglomerate, in accordance with the Accounting Standard of Institutions Regulated by the Central Bank of Brazil (Cosif). (Added, effective 7/1/2023, by CMN Resolution No. 5,049, of 11/25/2022.)

§ 2 For financial institutions and other institutions authorized by the Central Bank of Brazil part of a prudential conglomerate led by a payment institution, the minimum requirements mentioned in the caput must be calculated on a consolidated basis, in accordance with the regulation applicable to this type of conglomerate. (Added, effective 7/1/2023, by CMN Resolution No. 5,049, of 11/25/2022.)

CHAPTER III

OF THE CALCULATION OF THE RISK-WEIGHTED ASSETS AMOUNT

Art. 3 For the purposes of calculating the minimum requirements and the ACC mentioned, respectively, in Arts. 4 to 6 and 8, the amount of risk-weighted assets (RWA) must be calculated, which corresponds to the sum of the following components:

I - RWACPAD, relating to credit risk exposures subject to the capital requirement calculation using the standardized approach;

II - RWACIRB, relating to credit risk exposures subject to the capital requirement calculation using internal risk classification systems (IRB approaches) authorized by the Central Bank of Brazil;

III - RWAMPAD, relating to market risk exposures subject to the capital requirement calculation using the standardized approach;

IV - RWAMINT, relating to market risk exposures subject to the capital requirement calculation using an internal model authorized by the Central Bank of Brazil; and

IV - RWAMINT, relating to market risk exposures subject to the capital requirement calculation using an internal model authorized by the Central Bank of Brazil;(Amended, effective 1/1/2024, by CMN Resolution No. 5,049, of 11/25/2022.)

V - RWAOPAD, relating to the calculation of the capital required for operational risk using the standardized approach.

V - RWAOPAD, relating to the calculation of the capital required for operational risk using the standardized approach; and (Amended, effective 1/1/2024, by CMN Resolution No. 5,049, of 11/25/2022.)

VI - RWASP, relating to the calculation of the capital required for risks associated with payment services. (Added, effective 1/1/2024, by CMN Resolution No. 5,049, of 11/25/2022.)

§ 1 The RWAMPAD component mentioned in item III of the caput consists of the sum of the following components:

I - RWAJUR1, relating to exposures subject to the variation of fixed interest rates denominated in real whose capital requirement is calculated using the standardized approach;

II - RWAJUR2, relating to exposures subject to the variation of the rate of coupons of foreign currencies whose capital requirement is calculated using the standardized approach;

III - RWAJUR3, relating to exposures subject to the variation of rates of coupons of price indices whose capital requirement is calculated using the standardized approach;

IV - RWAJUR4, relating to exposures subject to the variation of rates of coupons of interest rates whose capital requirement is calculated using the standardized approach;

V - RWAACS, relating to exposures subject to the variation of stock prices whose capital requirement is calculated using the standardized approach;

VI - RWACOM, relating to exposures subject to the variation of commodity prices (commodities) whose capital requirement is calculated using the standardized approach;

VII - RWACAM, relating to exposures in gold, in foreign currency and in assets subject to exchange rate variation whose capital requirement is calculated using the standardized approach; and

VII - RWACAM, relating to exposures in gold, in foreign currency and in assets subject to exchange rate variation whose capital requirement is calculated using the standardized approach; (Amended, effective 1/1/2023, by CMN Resolution No. 5,038, of 9/29/2022.)

VIII - RWADRC, relating to credit risk exposures of financial instruments classified in the trading book.

VIII - RWADRC, relating to credit risk exposures of financial instruments classified in the trading book; and (Amended, effective 1/1/2023, by CMN Resolution No. 5,038, of 9/29/2022.)

IX - RWACVA, relating to exposures to the risk of variation in the value of derivative financial instruments due to the variation in the credit quality of the counterparty. (Added, effective 1/1/2023, by CMN Resolution No. 5,038, of 9/29/2022.)

§ 2 The procedures and parameters for calculating the components mentioned in the caput and the components mentioned in § 1 will be established by the Central Bank of Brazil.

§ 3 The RWASP component applies only to the institution classified in Segment 2 (S2) or Segment 3 (S3) or Segment 4 (S4), in accordance with Resolution No. 4,553, of 2017.(Added, effective 1/1/2024, by CMN Resolution No. 5,049, of 11/25/2022.)

CHAPTER IV

OF THE MINIMUM REQUIREMENTS FOR REFERENCE EQUITY, TIER 1 AND CORE CAPITAL

Art. 4 The minimum requirement for RE corresponds to the application of the "F" factor, with a value of 8% (eight percent), to the RWA amount.

Art. 5 The minimum requirement for Tier 1 corresponds to the application of 6% (six percent) to the RWA amount.

Art. 6 The minimum requirement for Core Capital corresponds to the application of 4.5% (four and five-tenths percent) to the RWA amount.

CHAPTER V

OF THE MINIMUM REQUIREMENTS FOR CREDIT COOPERATIVES

Art. 7 For standalone credit cooperatives not affiliated with central credit cooperatives that do not opt for the simplified calculation of the risk-weighted assets amount (RWAS5), according to specific regulation, the minimum requirements for RE, Tier 1 and Core Capital mentioned in Arts. 4, 5 and 6 of this Resolution are increased by four percentage points.

CHAPTER VI

OF THE ADDITIONAL CORE CAPITAL

Art. 8 The ACC corresponds to the sum of the following components:

I - ACCConservation, corresponding to the Additional Core Capital Conservation Surcharge;

II - ACCCountercyclical, corresponding to the Additional Countercyclical Core Capital Surcharge; and

III - ACCSystemic, corresponding to the Additional Systemic Importance Core Capital Surcharge, observing the provisions of § 2.

§ 1 Institutions referred to in Art. 1 are subject to compliance with the ACCConservation and ACCCountercyclical components.

§ 2 Institutions classified in Segment 1 (S1), in accordance with Resolution No. 4,553, of 2017, are subject to compliance with the ACCSystemic component.

§ 3 For an institution part of a prudential conglomerate, in accordance with Cosif, the calculation of the ACC must be performed on a consolidated basis.

§ 4 The percentage to be applied to the RWA amount, for the purpose of calculating the value of the ACCConservation component, will be equivalent to:

I - 2% (two percent), in the period from October 1, 2021 to March 31, 2022; and

II - 2.5% (two and five-tenths percent), from April 1, 2022.

§ 5 The Central Bank of Brazil will establish the methodology for calculating the ACCCountercyclical component and its percentage relative to the RWA amount.

§ 6 The maximum limit for the value of the ACCCountercyclical component is 2.5% (two and five-tenths percent) of the RWA amount.

§ 7 In the event of an increase in the percentage of the ACCCountercyclical component relative to the RWA amount, the new value of the component will take effect after 12 (twelve) months.

§ 8 The Central Bank of Brazil will establish the methodology for calculating the ACCSystemic component and its percentage relative to the RWA amount.

§ 9 The maximum limit for the value of the ACCSystemic component is 2% (two percent) of the RWA amount.

Art. 9 Failure to comply with the ACC, calculated in accordance with Art. 8, causes restrictions:

I - on the payment of variable remuneration to directors and members of the board of directors, in the case of joint-stock companies, and to administrators of limited liability companies;

II - on the payment of dividends and interest on equity;

III - on the payment of net surpluses calculated and annual remuneration to capital shares and on the redemption of capital shares, in the case of credit cooperatives;

IV - on the repurchase of own shares in any amount; and

V - on the reduction of share capital, when legally possible.

§ 1 The restrictions referred to in the caput must be imposed while the insufficiency of ACC persists.

§ 2 The variable remuneration referred to in item I of the caput includes bonuses, profit sharing and any deferred remuneration components and other incentive remunerations associated with performance.

§ 3 If the excess value of Core Capital relative to the minimum requirement set forth in Art. 6 is used to meet the minimum requirements set forth in Arts. 4 or 5, such value cannot be considered for verifying the sufficiency of the ACC.

§ 4 The restrictions applied to each activity mentioned in items I to III of the caput correspond to the following percentages of the amount to be paid:

I - 100% (one hundred percent), in the case where the value considered for verifying the sufficiency of the ACC is less than 25% (twenty-five percent) of that set forth in accordance with Art. 8;

II - 80% (eighty percent), in the case where the value considered for verifying the sufficiency of the ACC is greater than or equal to 25% (twenty-five percent) and less than 50% (fifty percent) of that set forth in accordance with Art. 8;

III - 60% (sixty percent), in the case where the value considered for verifying the sufficiency of the ACC is greater than or equal to 50% (fifty percent) and less than 75% (seventy-five percent) of that set forth in accordance with Art. 8; and

IV - 40% (forty percent), in the case where the value considered for verifying the sufficiency of the ACC is greater than or equal to 75% (seventy-five percent) and less than 100% (one hundred percent) of that set forth in accordance with Art. 8.

§ 5 Net surpluses distributed and not paid in the social year due to insufficiency in complying with the ACC will be incorporated into the reserves of the cooperative or, alternatively, to its capital, if so decided by the shareholders' meeting.

§ 6 Amounts retained due to insufficiency of ACC cannot be the object of future obligations.

§ 7 The restrictions mentioned in the caput apply to insufficiencies observed when calculating the values to be distributed, including those eventually advanced.

§ 8 The Central Bank of Brazil may fix a maximum individualized interval during which insufficiency in complying with the ACC is admissible.

§ 9 When insufficiency in complying with the Additional Core Capital is verified, the capital plan required in specific regulation must be amended, in order to include the actions necessary to correct the insufficiency until the end of the period established according to § 8.

CHAPTER VII

OF THE DEDUCTION OF THE EXCESS OF FIXED ASSETS AND THE SEPARATION OF CAPITAL

Art. 10 For the purposes of verifying compliance with the minimum requirements referred to in Arts. 4, 5 and 6, as well as the Additional Core Capital referred to in Art. 8, the eventual excess of resources applied in Fixed Assets relative to the percentage established in CMN Resolution No. 4,957, of October 21, 2021, must be deducted from RE, Tier 1 and Core Capital.

Art. 11 The institution that opts for the separation of RE in accordance with Art. 2 of Resolution No. 4,589, of June 29, 2017, must deduct the separated value from RE, Tier 1 and Core Capital for the purposes of verifying compliance with the minimum requirements, referred to respectively in Arts. 4, 5 and 6 of this Resolution and the ACC, referred to in Art. 8 of this Resolution.

CHAPTER VIII

FINAL PROVISIONS

Art. 12 The institutions mentioned in Art. 1 of this Resolution must also maintain sufficient RE to cover the risk of variation in interest rates for instruments classified in the banking book (IRRBB), as defined in Resolution No. 4,557, of February 23, 2017.

Art. 13 The Central Bank of Brazil will establish the requirements and procedures related to the authorization for the use of certain standardized approaches for the calculation of the RWAOPAD component by financial institutions and other institutions authorized by it to operate.

Art. 14 The following are revoked:

I - Art. 1 of Resolution No. 4,704, of December 19, 2018;

II - Resolution No. 4,193, of March 1, 2013;

III - Resolution No. 4,281, of October 31, 2013;

IV - Resolution No. 4,388, of December 18, 2014; (See CMN Resolution No. 4,956, of 10/21/2021.)

V - Resolution No. 4,443, of October 29, 2015; and

VI - Resolution No. 4,783, of March 16, 2020.

Sole paragraph. Citations to Resolution No. 4,193, of 2013, shall henceforth refer to this Resolution.

Art. 15 This Resolution enters into force on January 3, 2022.

Roberto de Oliveira Campos Neto
President of the Central Bank of Brazil