Compilation of Operating Rules – Modification of Articles 166.1 and 166.2 of Book XIII, Sanctioning and Procedural Regime, effective June 1, 2024

Montevideo, May 16, 2024 Ref: COMPILATION OF OPERATING RULES – Modification of Articles 166.1 and 166.2 of Book XIII, Sanctioning and Procedural Regime, effective June 1, 2024.

It is brought to your knowledge that this Central Bank adopted, on May 15, 2024, Resolution D/150/2024, which is attached.

Ec. Adolfo Sarmiento Manager of Economic Policy and Markets (Ref. No. 2023-50-1-02616) Diagonal Fabini 777 - C.P. 11100 - Tel.: (598 2) 1967 - Montevideo, Uruguay - www.bcu.gub.uy

1 CIRCULAR No. 2456

DIRECTORATE - RESOLUTION Montevideo, May 15, 2024.

DIRECTORATE

HAVING VIEWED: the reserve regime provided for in Book XIV – Reserve Regime, Articles 155.1 and 155.2 of Book XII – Information, and Articles 166.1 and 166.2 of Book XIII – Sanctioning and Procedural Regime, of the Compilation of Operating Rules, and Communication No. 2024/028 of January 25, 2024.

WHEREAS: I) that the Manager of Economic Policy and Markets, to which the application of sanctions in case of insufficiency of the mandatory minimum reserve or late or erroneous presentation of reserve information has been delegated, with the scope established in Resolution D/309/2013 of December 4, 2013, made a proposal for modification to the Compilation referred to in the HAVING VIEWED section, regarding the determination and application of said sanctions;

II) that the suppression of paragraph 2 of Communication No. 2024/028 of January 25, 2024 is also proposed, where it is established that “institutions that fail to comply with the Reserve Regime provided for in Book XIV of the Compilation of Operating Rules in any of the currencies for which the regime is established, will not receive remuneration in any currency in said month”.

CONSIDERING: I) that, according to the technical report submitted by the Manager of Economic Policy and Markets, it is considered appropriate to modify the sanction provided for in Article 166.1 of Book XIII – Sanctioning and Procedural Regime of the Compilation of Operating Rules, as well as to suppress what is provided in paragraph 2 of Communication No. 2024/028 of January 25, 2024, in order to incorporate aspects related to proportionality, moral hazard, and the obligation to report sanctioning resolutions issued by the Central Bank of Uruguay,

II) that, according to the aforementioned report, the current text of Article 166.2 of Book XIII – Sanctioning and Procedural Regime of the Compilation of Operating Rules must be modified, in order to adjust the fines provided for in case of late or erroneous sending of the information provided for in Articles 155.1 and 155.2 of Book XII, of said compilation.

ATTENTIVE: to the above, to what is provided for in Articles 3, 12 letter E) and 27 letter B) of Law No. 16.696, in the wording given by Law No. 18.401 of October 24, 2008, to Article 20 of Decree-Law No. 15.322 of September 17, 1982, in the wording given by Law No. 16.327 of November 11, 1992, with the modifications introduced by Law No. 17.613 of December 27, 2002, to Articles 155.1 and 155.2 of Book XII of the Compilation of Operating Rules, to what is provided in Book XIII Sanctioning and Procedural Regime and Book XIV Reserve Regime of the Compilation of Operating Rules, to Communication No. 2024/028 of January 25, 2024, to the opinion of the Legal Advisory No. 2024/0032 of January 30, 2024, to what was reported by the Manager of Economic Policy and Markets on May 13, 2024, and other background that appear in file No. 2023-50-1-2616,

IT IS RESOLVED:

1. Modify Articles 166.1 and 166.2 of Book XIII, Sanctioning and Procedural Regime, of the Compilation of Operating Rules, which shall be drafted in the following terms:

Article 166.1 (FINE FOR INSUFFICIENCY OF MANDATORY MINIMUM RESERVE). Violations of the mandatory minimum reserve rules in national currency, indexed units, and foreign currency, by banks and financial intermediation cooperatives, shall be sanctioned with a fine composed of two parts:

a) application of a punitive interest rate on the difference between the monthly sums of daily reserve shortfalls incurred and daily surpluses registered, including non-business days. The aforementioned interest rate shall be duly established and communicated by the Central Bank of Uruguay.

b) application of a progressive sanction, based on the number of days of non-compliance with the mandatory minimum reserve average daily that the deficit represents, of:

i) UI 25,000 (Twenty-five thousand Indexed Units) daily, for shortfalls representing up to 10 days of mandatory minimum reserve average daily;

ii) UI 50,000 (Fifty thousand Indexed Units) daily, for the following 11 to 20 days of mandatory minimum reserve average daily;

iii) UI 100,000 (One hundred thousand Indexed Units) daily, for the following 21 to 31 days of mandatory minimum reserve average daily.

Notwithstanding the foregoing, the minimum monthly fine in case of non-compliance in any of the indicated currencies shall not be less than UI 70,000 (Seventy thousand Indexed Units).

Violations of the mandatory minimum reserve rules in national currency, indexed units, and foreign currency, by financial houses, retail banks, and retail financial intermediation cooperatives, shall be sanctioned with a fine of UI 10,000 (Ten thousand Indexed Units), for each day of non-compliance measured in terms of the mandatory minimum reserve average daily.

For the calculation of the fine, the averages and the quotation of the USA dollar, Average Fund, provided by the Central Bank of Uruguay at the close of the respective settlement day shall be used, as well as the value of the indexed unit corresponding to said date.

Sanctioned institutions must transcribe in the Board of Directors’ Minute Book, within ninety days following notification or in the period indicated in the resolution itself, the fines applied by the Central Bank of Uruguay, within the framework of what is provided for in this article. Branches of institutions constituted abroad must communicate to the Board of Directors of their Head Office or the equivalent governing body, the information referred to above within the same periods. In all cases, a certified copy of the documentation accrediting compliance with these obligations shall be sent to the Central Bank of Uruguay, within the period of 15 business days following its compliance.

If the recidivism provided for in Article 159.1 of this Regulation is configured within a period of two years, it may be subject to an increase of the sanction provided for up to double its original magnitude.

Article 166.2 (FINE FOR LATE OR ERRONEOUS PRESENTATION OF THE INFORMATION PROVIDED FOR IN ARTICLES 155, 155.1 AND 155.2). The daily fine for the late or erroneous presentation of the information provided for in Article 155 shall be equivalent to 0.0000025 (twenty-five per ten million) of the basic equity for banks, while for the information provided for in Articles 155.1 and 155.2 it shall be that established in Article 673 of the Compilation of Rules and Control of the Financial System.

2. Repeal paragraph 2 of Communication No. 2024/028 of January 25, 2024, which establishes the following: “Institutions that fail to comply with the Reserve Regime provided for in Book XIV of the Compilation of Operating Rules in any of the currencies for which the regime is established, will not receive remuneration in any currency in said month”.

3. Entrust the Manager of Economic Policy and Markets with the setting of the punitive rate, referred to in Article 166.1 of Book XIII, Sanctioning and Procedural Regime, of the Compilation of Operating Rules, as well as its timely review and communication.

4. Establish that what is provided for in the preceding paragraphs shall enter into force for reserve obligations corresponding to the month following the approval of this resolution.

5. Entrust the Manager of Economic Policy and Markets with the communication of what is provided for in paragraph 1) by means of Circular.

(Session of today - Minutes No. 3707) (File 2023-50-1-2616)

Jorge Christy General Secretary

Aar/am/ds

Publishable Resolution

Signatory: Jorge Eduardo Christy Davies Date: 15/05/2024 16:52:55