Communication A 1493: New Regime for Foreign Currency Deposit and Application of Resources

BANCO CENTRAL DE THE REPUBLIC OF ARGENTINA
COMMUNICATION "A" 1493 20/07/89
TO FINANCIAL ENTITIES:
Ref.: CIRCULARS LIQUIDATION AND SOLVENCY LISOL - 1 - 31. ACTIVE OPERATIONS OPRAC - 1 - 248, PASSIVE OPERATIONS OPASI - 2 - 31 and MONETARY REGULATIONS - REMON - 1 -
520. Regime for the collection and application of resources in foreign currency.

We address you to inform you that this Institution has resolved to establish a new regime for the collection and application of resources in foreign currency, without prejudice to maintaining the current system of fixed-term deposits on behalf and order of the Central Bank.

Within the regime that is enabled, entities may receive sight and fixed-term deposits, from residents and non-residents in the country, at interest rates freely agreed with their clients. Such deposits will not have the guarantee provided for in the Financial Institutions Law.

The lending capacity arising from this collection may be applied, fundamentally, to the granting of financing to residents in the country linked to foreign trade operations and productive activities, to the granting of interbank loans, and to the making of sight placements with correspondents abroad.

Loan recipients will not be obliged to negotiate the relevant foreign exchange in the single exchange market.

To participate in the system established, in matters of fixed-term deposits, entities may not collect deposits on behalf and order of the Central Bank, so that intermediaries currently authorized to receive these latter deposits must choose to intervene in the new operation or continue in the aforementioned regime. The rest of the banks and financial companies, authorized to carry out operations in foreign currency, may request authorization to participate in the collection of deposits on behalf and order of this Institution.

In this regard, the Central Bank adopted the following resolution:

"1. Establish the regime for the collection and application of resources in foreign currency contained in Annexes I and II, which form an integral part of this resolution.
2. Repeal the regime for the collection of sight deposits in foreign currency contained
in point 1.1. of Chapter IV of Circular OPASI - 2.

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  Existing deposits of this nature may be maintained under the conditions provided in the regime enabled in the previous point.

3. Fix August 1, 1989 as the effective date of the preceding provisions.
4. Establish that, before July 26, 1989, entities authorized to collect fixed-term deposits on
   behalf and order of the Central Bank of the Republic of Argentina must inform the Management of Authorization of Financial Institutions of this Institution whether they continue or not with that operation. In the latter case, or if no response is received, they will be removed from the Register referred to in point 1.3. of Chapter IV of Circular OPASI - 2, effective from August 1, 1989, notwithstanding which they must intervene in the return of the deposits collected through their intermediation. The rest of the banks and financial companies, authorized to carry out operations in foreign currency (Communications "A" 1234 and 1289), may request their inscription in the aforementioned register. The requests received will be evaluated taking into consideration the elements mentioned in points 1.3.2.1. and 1.3.2.2. of said chapter."

We point out that an information system will be enabled, according to the norms that will be disseminated in due course, through which data must be supplied on the deposits collected, their rates and terms, and the applications made.

Finally, we clarify that the financing referred to in point 1.1. of
Annex II are subject to the norms on fragmentation of credit risk and graduation of credit.

We salute you very respectfully.
BANCO CENTRAL DE LA REPÚBLICA ARGENTINA
Alfredo A. Besio René E. de Paul
Manager of Norms for General Manager
Financial Institutions

ANNEXES

B.C.R.A. FOREIGN CURRENCY DEPOSITS Annex I to
Comm. "A" 1493

1. Sight:
   1.1. Intervening Entities.
   Banks authorized to operate in foreign currency in Categories "B" and "C".
   1.2. Currency
   United States Dollar. Upon request of the entities, the Central Bank may authorize the collection of sight deposits in other currencies.
   1.3. Interest
   1.3.1. Rate
   The one freely agreed with its clients.
   1.3.2. Settlement Interest will be settled and capitalized for expired periods not exceeding one year.
   Upon total withdrawal of the deposited sums, due to the closing of the account, interest will be settled up to the day prior to the withdrawal.
   1.4. Withdrawals
   Requests for the return, for partial or total amounts, of deposited funds must be satisfied at the time they are made, without prior notice being required and in the same class of currency in which they were constituted. The documents used for the withdrawal of funds must meet the characteristics of a receipt. Entities may also process instructions received in writing from account holders that signify a withdrawal of funds.
   1.5. Guarantee
   These deposits are excluded from the guarantee established in article 56 of Law 21.526, text according to Law 22051, an aspect that must be expressly stated in the documents relating to the clientele.
   1.6. Minimum Cash
   1.6.1. Requirements
   20%.

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  1.6.2. Integration.
  It will be carried out in the corresponding collection currency, in the following manner:
  1.6.2.1. Not less than 70% of the requirement with the credit balance of the "Minimum
  cash" account opened at the Banco de la Nación Argentina (New York branch) or other banks abroad that will be indicated in due course, with respect to deposits in United States dollars. With regard to deposits in other currencies, the account will be opened at the banks abroad that are designated.
  1.6.2.2. The remainder of the requirement with banknotes and coins.
  Deficiencies in the integration of each of such requirements will be considered for all purposes as deficiencies in minimum cash. In aspects not provided for, the norms contained in Chapter II of Circular REMON - 1 will apply.

2. Fixed-term.
   2.1. Intervening Entities.
   Banks authorized to operate in foreign currency in Categories "B" and "C", that are not registered in the Register of entities authorized to collect fixed-term deposits on behalf and order of the Central Bank of the Republic of Argentina.
   2.2. Currency.
   United States Dollar. Upon request of the entities, the Central Bank may authorize the collection of fixed-term deposits in other currencies. Total or partial cancellations made at the maturity of each deposit must be effected in the same class of currency in which it was constituted. When the deposit was made in banknotes, the depositor may opt, upon total or partial withdrawal, to receive banknotes or transfers.
   2.3. Minimum Term.
   30 days.
   2.4. Interest Rate.
   The one freely agreed with its clients.

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  B.C.R.A. FOREIGN CURRENCY DEPOSITS Annex I to
  Comm. "A" 1493

2.5. Instrumentation.
Certificates representing these deposits will be issued, with the following denominations: "Transferable named certificate of fixed-term deposit in foreign currency" or "Non-transferable named certificate of fixed-term deposit in foreign currency".
2.6. Guarantee
These deposits are excluded from the guarantee established in article 56 of Law 21.526, text according to law 22.051, an aspect that must be expressly stated in the documents relating to the clientele.
2.7. Secondary Negotiation
Financial entities may intermediate or purchase transferable certificates, provided that from the date of their issuance or last negotiation or transfer, a period of no less than 30 days has elapsed. For the purposes of this intermediation or purchase, endorsers must record the dates on which they formalize the endorsements. The purchased documents will be charged to unencumbered own resources, adjusted to the provisions contained in point 2 of Communication "A" 1465, and/or to the lending capacity of foreign currency deposits. Certificates acquired by the issuing entities themselves will be charged to the respective deposit, which must be cancelled.
2.8. Minimum Cash.
2.8.1. Requirements
Term Rate

• in % -
  30 to 89 days 10
  90 to 179 days 7.5
  180 days and more 5

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  2.8.2. Integration.
  It will be carried out in the corresponding collection currency, in the following manner:
  2.8.2.1. Not less than 70% of the requirement with the credit balance of the "Minimum
  cash" account opened at the Banco de la Nación Argentina (New York branch), or other banks abroad that will be indicated in due course, with respect to deposits in United States dollars.

With regard to deposits in other currencies, the account will be opened at the banks abroad that are designated.
2.8.2.2. The remainder of the requirement with banknotes and coins.
Deficiencies in the integration of each of such requirements will be considered for all purposes as deficiencies in minimum cash. In aspects not provided for, the norms contained in Chapter II of Circular REMON - 1 will apply.

3. Other provisions.
   3.1. These deposits will be subject, within the relationship for deposits and other obligations, to a maximum daily limit of 3 times the computable net worth of the
   last day of the month immediately preceding the one in question.
   3.2. The norms contained in point 5 of Chapter I of Circular
   OPASI - 2 will apply, insofar as pertinent.

B.C.R.A. APPLICATION OF RESOURCES Annex II to
Comm. "A" 1493

1. Destinations.
   The lending capacity of the deposits referred to in Annex I must be applied, in foreign currency, indistinctly to the following destinations:
   1.1. Financing to residents in the country, in accordance with the provisions issued in matters of
   credit policy, oriented mainly to attend foreign trade operations and productive activities. Loan recipients will not be obliged to negotiate the relevant foreign exchange in the single exchange market.
   1.2. Interbank loans.
   1.3. Certificates of fixed-term deposits in foreign currency, excluding those collected on
   behalf and order of the Central Bank, purchased through secondary negotiation.
   1.4. External Bonds of the Republic of Argentina, not exceeding 30% of the lending capacity.
   1.5. Sight placements with correspondents abroad.
2. Deficiencies in application.
   They will determine an increase in the minimum cash requirement equivalent.
3. Investment excesses.
   They will be charged to unencumbered own resources, in accordance with the norms contained in point 2, of Communication "A" 1465.
4. Determination of deficiencies and excesses.
   It will be carried out based on the monthly average of daily balances (capital and interest) of the items included.