CMN Resolution No. 4589 - Defines exposure limit and annual global credit limit for public sector entities

The Central Bank of Brazil, in accordance with Article 9 of Law No. 4,595 of December 31, 1964, makes public that the National Monetary Council, in a session held on June 29, 2017, considering the provisions of Article 4, items VI and VIII, of the aforementioned Law,

R E S O L V E D:

Art. 1. The amount of credit operations of each financial institution and other institutions authorized to operate by the Central Bank of Brazil with public sector bodies and entities is limited to 45% (forty-five percent) of Reference Equity (RE), in accordance with current regulations.

§ 1. For the purposes of this Resolution, it is understood:

I - as public sector bodies and entities:

a) direct administration of the Union, states, Federal District, and municipalities;

b) autarchies and foundations established or maintained, directly or indirectly, by the Union, states, Federal District, and municipalities;

c) non-financial public companies and mixed-economy societies, their subsidiaries, and other companies controlled, directly or indirectly, by the Union, states, Federal District, and municipalities, including exclusive-object societies; and

d) other bodies or entities of the powers of the Union, states, Federal District, and municipalities;

II - as credit operations:

a) loans and financing;

b) leasing operations;

c) definitive acquisition or carried out through committed resale operations of securities issued by the public sector bodies and entities mentioned in item I, letter "c", of this paragraph, excluding the definitive acquisition of shares of mixed-economy societies;

d) the granting of guarantees of any nature; and

e) any and all operations that result, directly or indirectly, in the granting of credit and/or raising of resources of any nature, including the use of financial derivatives.

§ 2. The credit operations of responsibility or that have formal and integral guarantee of the Union are not subject to the limit established in the main text.

§ 3. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil subject to the preparation of Consolidated Prudential Conglomerate Financial Statements, in accordance with Resolution No. 4,280 of October 31, 2013, must calculate the limit referred to in the main text on a consolidated basis.

Art. 2. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil may allocate a portion of RE exclusively for application in credit operations with public sector bodies and entities, which will be deducted from RE for the purpose of calculating all operational limits, including that provided for in Article 1 of this Resolution.

§ 1. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil must communicate the exercise of the option provided for in the main text in the manner to be defined by that Autarchy.

§ 2. The outstanding balance of the credit operations mentioned in this article does not integrate the calculation base for the amount of risk-weighted assets (RWA), defined in Article 3 of Resolution No. 4,193 of March 1, 2013.

Art. 3. For the purpose of carrying out new credit operations, in accordance with this Resolution, financial institutions and other institutions authorized to operate by the Central Bank of Brazil must be within the operational limits established by current regulations.

Sole Paragraph. The provision in the main text does not apply to credit operations of responsibility or that have formal and integral guarantee of the Union and that present linked and identical raising and application structures, with respect to term and interest rate.

Art. 4. The following are prohibited to financial institutions and other institutions authorized to operate by the Central Bank of Brazil:

I - carrying out credit operations with public sector bodies and entities that are in default with financial institutions and other institutions authorized to operate by the Central Bank of Brazil;

II - contracting new credit operations with public sector bodies and entities if they have pending registration in the System for Registration of Operations with the Public Sector (Cadip);

III - receiving, in any modality of credit operations, as principal or accessory guarantee, promissory notes, trade acceptances, bills of exchange, or other instruments of the kind, as well as letters of credit, guarantees, and sureties of direct or indirect responsibility of public sector bodies and entities, corresponding to commitments assumed with suppliers, construction contractors, or service providers; and

IV - carrying out any type of operation that implies transfer, under any title, of direct or indirect responsibility for the payment of debt to public sector bodies or entities, except for operations with Union guarantee.

§ 1. The prohibition provided for in item III of the main text does not apply to operations contracted by public companies or by mixed-economy societies controlled directly or indirectly by the Union, states, Federal District, and municipalities, nor to operations formally and exclusively guaranteed by trade acceptances for the sale of goods or provision of services drawn against the entities defined in letter "c" of item I of § 1 of Article 1 of this Resolution.

§ 2. A public sector body or entity is considered in default if it has a debt, fully or partially due, for a period exceeding thirty days.

§ 3. The prohibition referred to in item IV of the main text does not apply to operations of transfer of corporate control of a temporary nature, understood as such those that last for a maximum period of 180 days.

§ 4. The prohibition provided for in item IV of the main text does not cover the granting of guarantees by electricity sector companies, at the federal, state, municipal, and district levels, to a special purpose vehicle constituted by them, limited to the percentage of their participation in said vehicle, exclusively for investments linked to the Electricity Generation and Transmission Program, within the Accelerated Growth Program (PAC).

Art. 5. The annual global limit of new credit operations contracted by financial institutions and other institutions authorized to operate by the Central Bank of Brazil with public sector bodies and entities will be defined for each fiscal year in an Annex to this Resolution.

§ 1. For the purposes of the main text, the National Monetary Council will establish, by the end of each fiscal year, the limit valid for the following fiscal year, specifying the maximum amounts that can be contracted in credit operations with and without Union guarantee.

§ 2. The following credit operations of financial institutions and other institutions authorized to operate by the Central Bank of Brazil are not included in the global value established according to the main text:

I - contracted with the entities mentioned in letter "c" of item I of § 1 of Article 1 of this Resolution regarding operations supporting exports;

II - operations described in letter "c" of item II of § 1 of Article 1 of this Resolution; and

III - credit operations carried out by Development Agencies and Development Banks, provided they are carried out with allocation of a portion of RE, in the manner of Article 2 of this Resolution.

Art. 6. The System for Registration of Operations with the Public Sector (Cadip) is maintained.

Art. 7. The Central Bank of Brazil is authorized to:

I - publish on its website:

a) information relating to credit operations contracted under this Resolution by bodies and entities mentioned in item I of § 1 of Article 1 that have legal personality of public law;

b) consolidated information relating to credit operations contracted under this Resolution by bodies and entities mentioned in item I of § 1 of Article 1 that have legal personality of private law;

II - adopt the measures and issue the norms necessary for compliance with the provisions of this Resolution.

Art. 8. The provisions of this Resolution do not apply to credit operations carried out with:

I - Petrobras S.A. (Petrobras), its subsidiaries and controlled companies; and

II - the companies of the Eletrobrás group, its subsidiaries and controlled companies.

Art. 9. Credit operations whose firm proposal is filed with the Secretariat of the National Treasury until December 31, 2017 are subject to the limits and conditions established in Resolution No. 2,827 of March 30, 2001.

Art. 10. This Resolution enters into force on January 1, 2018.

Art. 11. The following are revoked:

I - Article 1 of Resolution No. 3,453 of April 26, 2007;

II - Article 3 of Resolution No. 4,403 of March 26, 2015;

III - as Resolutions No. 2,827, of March 30, 2001, 2,920, of December 26, 2001, 2,945, of March 27, 2002, 2,954, of April 25, 2002, 3,049, of November 28, 2002, 3,129, of October 30, 2003, 3,153, of December 11, 2003, 3,173, of February 19, 2004, 3,174, of February 19, 2004, 3,191, of April 29, 2004, 3,201, of May 27, 2004, 3,204, of June 18, 2004, 3,228, of August 26, 2004, 3,290, of June 3, 2005, 3,294, of June 29, 2005, 3,313, of September 2, 2005, 3,327, of November 11, 2005, 3,331, of November 28, 2005, 3,338, of December 23, 2005, 3,365, of April 26, 2006, 3,372, of June 16, 2006,
3,430, of December 26, 2006, 3,437, of January 22, 2007, 3,438, of January 22, 2007, 3,439, of January 30, 2007, 3,465, of June 29, 2007, 3,466, of June 29, 2007, 3,508, of November 30, 2007, 3,529, of January 23, 2008, 3,536, of January 31, 2008, 3,542, of February 28, 2008, 3,551, of March 27, 2008, 3,616, of September 30, 2008, 3,626, of October 30, 2008, 3,647, of November 26, 2008, 3,653, of December 17, 2008, 3,686, of February 19, 2009, 3,688, of February 19, 2009, 3,696, of March 26, 2009, 3,716, of April 17, 2009, 3,723, of May 12, 2009, 3,727, of May 28,
2009, 3,752, of June 30, 2009, 3,770, of August 3, 2009, 3,778, of August 26, 2009, 3,780, of August 26, 2009, 3,781, of August 26, 2009, 3,794, of October 7, 2009, 3,801, of October 28, 2009, 3,830, of December 23, 2009, 3,831, of January 13, 2010, 3,835, of January 28, 2010, 3,848, of March 25, 2010, 3,857, of May 27, 2010, 3,871, of June 22, 2010, 3,878, of June 22, 2010, 3,894, of July 29, 2010, 3,907, of September 30, 2010, 3,937, of December 16, 2010, 3,939, of December 16, 2010, 3,940, of December 31, 2010, 3,953, of February 24,
2011, 3,958, of March 31, 2011, 3,971, of April 28, 2011, 3,976, of May 27, 2011, 3,980, of May 31, 2011, 4,004, of August 25, 2011, 4,005, of August 25, 2011, 4,015, of September 29, 2011, 4,027, of October 27, 2011, 4,045, of December 29, 2011, 4,046, of January 26, 2012, 4,085, of May 24, 2012, 4,086, of May 24, 2012, 4,091, of May 24, 2012, 4,098, of June 28, 2012, 4,109, of July 5, 2012, 4,133, of September 5, 2012, 4.148, of October 25, 2012, 4,155, of November 1, 2012, 4,156, of November 7, 2012, 4,157, of November 22, 2012, 4,158, of November 22,
2012, 4,167, of December 20, 2012, 4,168, of December 20, 2012, 4,169, of December 20, 2012, 4,182, of January 31, 2013, 4,203, of March 28, 2013, 4,225, of June 13, 2013, 4,244, of June 28, 2013, 4,262, of August 22, 2013, 4,270, of September 30, 2013, 4,291, of December 13, 2013, 4,322, of March 27, 2014, 4,332, of May 26, 2014, 4,333, of May 26, 2014, 4,334, of May 26, 2014, 4,341, of June 20, 2014, 4,357, of July 31, 2014, 4,366, of August 28, 2014, 4,369, of September 18, 2014, 4,448, of November 20, 2015, 4,462, of January 28,
2016, 4,466, of February 25, 2016, 4,473, of March 31, 2016, 4,505, of July 20, 2016, 4,506, of July 28, 2016, 4,531, of November 24, 2016, 4,556, of February 23, 2017, 4,563, of March 31, 2017, 4,564, of March 31, 2017, and 4,566, of April 27, 2017.

Ilan Goldfajn
President of the Central Bank of Brazil