CMN Resolution No. 5,114 of December 21, 2023: Amendments to Resolution No. 4,222/2013 Regarding FGC-Associated Institutions' Federal Government Securities Allocation and DPGE Issuance Limits

RESOLUTION
CMN NO. 5,114, OF DECEMBER 21, 2023

Amends Resolution No. 4,222, of May 23, 2013, to establish the conditions under which institutions associated with the Credit Guarantee Fund (FGC) must maintain amounts allocated in federal government securities and to amend the maximum limit for the issuance of Special Guarantee Time Deposits (DPGE).

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 December 21, 2023, based on Articles 3, item VI, and 4, item VIII, of the aforementioned law and on Article 28, paragraph 1, of Complementary Law No. 101, of May 4, 2000,

R E S O L V E D:

Article 1. Resolution No. 4,222, of May 23, 2013, shall enter into force with the following amendments:

“Article 2-A ........................................................................................................

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Paragraph 2. The Central Bank of Brazil shall regulate the method for calculating Adjusted Net Worth, Reference Value, and Reference Collections, for the purposes of this Resolution.

...............................................................................................................” (NEW)

“Article 2-B. Starting from July 1, 2024, the institution associated with the FGC must maintain amounts allocated exclusively in federal government securities when the Reference Value exceeds 6 (six) times the Adjusted Net Worth and 80% (eighty percent) of the Reference Collections.

Paragraph 1. The amount to be allocated in federal government securities (MATPF) is calculated on the base date of the additional contribution assessment according to the following formula:

MATPF = max {(VR_Excedente – fn x VR_Excedente30.11.2023); 0}, where:

I - MATPF is the amount to be allocated in federal government securities until the first business day of the month following the assessment;

II - VR_Excedente is the Excess Reference Value calculated on the base date of the additional contribution assessment, according to the following formula:

VR_Excedente = min {5 x (VR – 0.80 x CR); (VR – 6 x PLA)}, where:

a) VR is the Reference Value;

b) CR are the Reference Collections; and c) PLA is the Adjusted Net Worth;

III - VR_Excedente30.11.2023 is the VR_Excedente assessed according to the formula of item II on the base date of November 30, 2023; and

IV - fn is the semi-annual reduction factor of VR_Excedente30.11.2023, where the initial factor (f0) will be 1 (one) and the subsequent factors will be successively reduced by 0.125 (one hundred and twenty-five thousandths) per semester, starting from the date attributed to f0.

Paragraph 2. For the fn to be applied in the formula of Paragraph 1 of this article, the following dates shall be assigned:

I - f0 = 1 (one), starting from July 1, 2024;

II - f1 = 0.875 (eight hundred and seventy-five thousandths), starting from January 1, 2025;

III - f2 = 0.750 (seven hundred and fifty thousandths), starting from July 1, 2025;

IV - f3 = 0.625 (six hundred and twenty-five thousandths), starting from January 1, 2026;

V - f4 = 0.500 (five hundred thousandths), starting from July 1, 2026;

VI - f5 = 0.375 (three hundred and seventy-five thousandths), starting from January 1, 2027;

VII - f6 = 0.250 (two hundred and fifty thousandths), starting from July 1, 2027;

VIII - f7 = 0.125 (one hundred and twenty-five thousandths), starting from January 1, 2028;

IX - f10 = 0 (zero), starting from July 1, 2028.

Paragraph 3. In cases of incorporation or merger, the date attributed to f0 referred to in item IV of Paragraph 1 of this article for the FGC-associated institution resulting from the process shall be the date of approval by the Central Bank of Brazil of the respective corporate act, and fn will be multiplied by the VR_Excedente of the last day of the month immediately following the approval, with the provisions of Paragraph 2 of this article not applying.

Paragraph 4. The Central Bank of Brazil:

I - shall establish the procedures regarding the calculation of MATPF and the registration of federal government securities allocated by virtue of this article; and

II - may determine a different allocation than MATPF to ensure adequate liquidity levels and the regular functioning of institutions.” (NEW)

“Article 2-C. If there is a resolution by the General Assembly for the dissolution of the company, the institution associated with the FGC is exempt from the obligations referred to in Articles 2-A and 2-B starting from the date of approval of the corporate act by the Central Bank of Brazil.” (NEW)

“Article 3. ...........................................................................................................

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Paragraph 4. The deposits referred to in Paragraph 1 shall have a minimum value of BRL 1,000,000.00 (one million reais), a minimum term of six months, and a maximum term of thirty-six months.

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“Article 4. The amount of collections through DPGE is limited to the greater of the following values, and may not exceed BRL 3,000,000,000.00 (three billion reais):

...............................................................................................................” (NEW)

Article 2. This Resolution enters into force on March 1, 2024.

ROBERTO DE OLIVEIRA CAMPOS NETO
President of the Central Bank of Brazil