CMN Resolution No. 4704 Amending Resolutions No. 4,193 and No. 4,502 on Minimum Reference Equity, Level I, and Principal Capital Requirements

The Central Bank of Brazil, pursuant to Article 9 of Law No. 4,595 of December 31, 1964, makes public that the National Monetary Council, in a session held on December 19, 2018, based on Articles 3, item VI, and 4, items VIII and XI, of the aforementioned Law, Articles 9 and 10 of Law No. 4,728 of July 14, 1965, Article 20, § 1, of Law No. 4,864 of November 29, 1965, Articles 7 and 23 of Law No. 6,099 of September 12, 1974, and Article 1, § 1, and 12 of Complementary Law No. 130 of April 17, 2009,

R E S O L V E S:

Article 1. Resolution No. 4,193 of March 1, 2013, shall enter into force with the following amendments:

“Article 7. For single cooperatives not affiliated with central credit cooperatives that do not opt for the calculation of risk-weighted assets using the simplified method (RWAS5), as provided in Article 11 of Resolution No. 4,606 of October 19, 2017, the minimum requirements for Reference Equity (PR), Level I, and Principal Capital mentioned in Articles 4, 5, and 6 of this Resolution shall be increased by four percentage points.” (NR)

“Article 8. .............................................................

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

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“Article 9. ...............................................................

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§ 10. If there is a shortfall in compliance with the Principal Capital Surcharge, the capital plan referred to in item IV of Article 40 of Resolution No. 4,557 of February 23, 2017, must be amended to include the necessary actions to correct the shortfall until the end of the period established in accordance with § 9.” (NR)

“Article 11. An institution that opts to highlight Reference Equity (PR) in accordance with Article 2 of Resolution No. 4,589 of June 29, 2017, must deduct the highlighted value of PR, Level I, and Principal Capital for the purpose of verifying compliance with the minimum requirements referred to in Articles 4, 5, and 6 of this Resolution and the Principal Capital Surcharge referred to in Article 8 of this Resolution.” (NR)

“Article 13. The institutions mentioned in Article 1 of this Resolution must also maintain sufficient Reference Equity (PR) to cover the risk of interest rate variation for instruments classified in the banking book (IRRBB), as defined in Resolution No. 4,557 of 2017.” (NR)

Article 2. Resolution No. 4,502 of June 30, 2016, shall enter into force with the following amendments:

“Article 2. Institutions classified in Segment 1 (S1), pursuant to Resolution No. 4,553 of January 30, 2017, must prepare the recovery plan, as established in this Resolution, and submit it to the Central Bank of Brazil by December 31 of each year.

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“Article 24. ..............................................................

I - in the main text of Article 2 of this Resolution; or

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“Article 27-A. Institutions classified in S1 that, as of the reference date of December 31, 2018, were not subject to the preparation of recovery plans are exempt from complying with the provisions of this Resolution until December 31, 2019.” (NR)

“Article 28. ..............................................................

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§ 3. The institutions mentioned in Article 27-A of this Resolution are exempt from observing the provisions of the main text until June 30, 2020.” (NR)

Article 3. The following are revoked:

I - §§ 1 and 2 of Article 2 of Resolution No. 4,502 of 2016; and

II - Article 27 of Resolution No. 4,502 of 2016.

Article 4. This Resolution enters into force on January 1, 2019.

Ilan Goldfajn

President of the Central Bank of Brazil