Credit policy: local financing in pesos to large exporting companies

2013 - YEAR OF THE BICENTENNIAL OF THE GENERAL CONSTITUENT ASSEMBLY OF 1813

COMMUNICATION “A” 5493
05/11/2013

TO FINANCIAL INSTITUTIONS:

Ref.: Circular
OPRAC 1 - 709

Credit policy. Local financing in pesos to large exporting companies.

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We address you to inform you that this Institution adopted the following resolution:

“1. Incorporate, with effect from 7.11.13, following Section 5. of the rules on “Credit policy”, the following:

“Section X. Application of the lending capacity of deposits in national currency and liquid own resources to financing to large exporting companies.

X.1. Clients included.

Clients that concurrently meet the following conditions are included in the category of “Large exporting companies”:

X.1.1. The total amount of their exports of goods and services of the immediately preceding 12 calendar months represent at least 75% of their total sales -considering the domestic market and exports- for that period.

For the purposes of calculating the aforementioned ratio:

• those made by the company in the domestic market to its related clients shall be excluded from the amount of total sales -applying the criterion provided in point 2.2. of Section 2. of the rules on “Credit risk splitting”-, except in the case of sales of goods to distribution companies for their commercialization in the domestic market;

• industrial exports included in international complementation agreements in which Argentina is a party shall not be considered.

X.1.2. Maintain a total amount of financing covered in local currency in the financial system as a whole that exceeds $ 200 million.

The covered financing shall be those that have involved disbursements of funds as well as the unused amount of the credit limit assigned for overdrafts on current accounts. Its principal balance shall be calculated at the end of the month prior to the one corresponding to its determination.

For the purposes of verifying the classification at the time of requesting financing, when its total debt -according to the latest information available in the “Central de deudores del sistema financiero”- exceeds $ 50 million, financial institutions must require clients to submit a sworn statement as to whether or not they have the status of “Large exporting company”, which shall be valid for 30 consecutive days.

Additionally, if that information exceeds $ 200 million and it is stated by sworn statement that it is not a “Large exporting company”, the client must submit a certification to that effect issued by an External Auditor or independent Public Accountant (with signature duly certified by the respective Professional Council of Economic Sciences).

That certification shall remain valid for 90 consecutive days from the date to which it refers, without prejudice to the submission of a new sworn statement by the client if applicable.

X.2. Lending capacity of deposits in pesos and liquid own resources destined for “Large exporting companies”.

The lending capacity of deposits in pesos and liquid resources shall be 0.3 % of the sum of deposits in pesos -net of their minimum cash requirement- and the entity's liquid own resources.

The calculation of deposits shall be made based on the monthly average of daily balances recorded in the previous month.

The liquid own resources of the previous month shall be considered, taking into account the definitions provided in point 3.1. of Section 3.

The available lending capacity shall be the positive value obtained by deducting from the amount resulting from the preceding calculation the outstanding covered financing corresponding to “Large exporting companies”.

X.3. Application of the lending capacity of deposits in pesos and liquid own resources destined for “Large exporting companies”.

Financial institutions may only grant new financing in pesos to the group of clients covered by the definition of “Large exporting companies”, without the prior consent of the Central Bank, to the extent that with such disbursements they do not exceed their available lending capacity determined in accordance with the provisions of point X.2.

For these purposes, new financing covered by this regime shall be understood as those that involve disbursements of funds -whatever the modalities used, whether granted directly, instrumented in the form of financial leasing (“leasing”), negotiable obligations or incorporated by purchase or assignment, including those comprising asset portfolios for which debt securities or participations are held (trusts, mutual investment funds, etc.)- and/or extensions of credit limits assigned for overdrafts on current accounts, renewals, extensions, waits

CENTRAL BANK
OF THE ARGENTINE REPUBLIC

(express or tacit) or any other modality of refinancing with respect to transactions covered that are outstanding.”

2. Replace, with effect from 7.11.13, Section 6. of the rules on “Credit policy”, with the following:

“6.1. Individual basis.

Financial institutions (exclusively including their domestic offices) shall observe the rules on “Credit policy” on an individual basis.

Those provisions, with the exception of Section X., shall also apply to foreign branches, to the extent that they operate with resources from the entity's domestic offices, additional to the assigned capital.

6.2. Consolidated basis.

Without prejudice to individual compliance, controlling financial entities subject to consolidated supervision shall observe the rules on “Credit Policy”, with the exception of Section X., on a monthly consolidated basis and, additionally and independently, quarterly (excluding their foreign subsidiaries).

Foreign subsidiaries shall be included, to the extent that they operate with resources from the head offices in the entity's country, in addition to the equity participation.”

3. Establish that financing agreements reached with clients categorized as “Large exporting companies” in force as of 4.11.13 may be disbursed even when there is no available lending capacity, provided they cannot be cancelled discretionally and unilaterally by the financial entity.”

Likewise, it is noted that the amount of the financing agreements used to establish the condition of “Large exporting companies” and the percentage applied to determine the lending capacity for those clients may be adjusted by this Institution in accordance with the evolution of the credit variables of the financial system. Furthermore, it is clarified that these provisions do not cover financing in foreign currency.

Finally, we send you in an annex the pages that, replacing those previously provided, should be incorporated into the ordered text of the rules on “Credit Policy”. Likewise, it is recalled that on this Institution's website www.bcra.gob.ar, by accessing “regulations” (“ordered texts”), you will find the modifications made with texts highlighted in special characters (strikethrough and bold).

We greet you attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Matías A. Gutiérrez Girault
Gerente de Emisión de Normas

Alfredo A. Besio
Subgerente General de Normas

ANNEX

B.C.R.A.
CREDIT POLICY

-Index-

Section 1. General credit policy.

1.1. General criterion.

1.2. Covered financings.

1.3. Credit management.

Section 2. Application of the lending capacity of deposits in foreign currency.

2.1. Destinations.

2.2. Conditions.

2.3. Effectiveness.

2.4. Allocation of incorporated financings.

2.5. Financings recorded in memorandum accounts.

2.6. Lending capacity.

2.7. Application defects.

Section 3. Application of liquid own resources.

3.1. Liquid own resources.

3.2. Application.

Section 4. Financing to the country's non-financial public sector.

4.1. Applicable rules.

Section 5. Financing to residents abroad.

5.1. General criterion.

5.2. Placements in banks abroad.

5.3. Holding of foreign securities.

Section 6. Application of the lending capacity of deposits in pesos and liquid own resources destined for “Large exporting companies”.

6.1. Covered clients.

6.2. Lending capacity of deposits in pesos and liquid own resources destined for “Large exporting companies”.

6.3. Application of the lending capacity of deposits in pesos and liquid own resources destined for “Large exporting companies”.

Version: 6a. COMUNICACIÓN “A” 5493
Effective date:
07/11/2013
Page 1

-Index-

Section 7. Bases of observance.

7.1. Individual basis.

7.2. Consolidated basis.

Section 8. Transitional provisions.

Correlation table.

B.C.R.A. CREDIT POLICY

BANCO CENTRAL
DE LA REPÚBLICA ARGENTINA

Version: 1a. COMUNICACIÓN “A” 5493
Effective date:
07/11/2013
Page 2

CREDIT POLICY
B.C.R.A. Section 6. Application of the lending capacity of peso deposits and net own liquid resources destined to "Large exporting companies".

6.1. Clients included.

Clients that concurrently meet the following conditions are included in the category of "Large exporting companies":

6.1.1. The total amount of their exports of goods and services in the immediately preceding 12 calendar months represents at least 75% of their total sales - considering the domestic market and exports - for that period.

For the purposes of calculating the aforementioned ratio:

• those made by the company in the domestic market to its related clients shall be excluded from the total sales amount - applying the criterion set forth in point 2.2. of Section 2. of the rules on "Credit risk splitting" -, except in the case of sales of goods to distribution companies for their commercialization in the domestic market;

• industrial exports included in international complementation agreements to which Argentina is a party shall not be considered.

6.1.2. They maintain a total amount of financing covered in local currency in the financial system as a whole that exceeds $ 200 million.

The covered financing shall be that which has involved disbursements of funds as well as the unused amount of the credit limit assigned for overdrafts on current accounts. Its principal balance shall be calculated at the end of the month prior to the one corresponding to its determination.

For the purposes of verifying the classification at the time of requesting financing, when its total debt - according to the latest information available in the "Central de deudores del sistema financiero" - exceeds $ 50 million, financial institutions must require clients to submit a sworn statement as to whether or not they have the status of "Large exporting company", which shall be valid for 30 consecutive days.

Additionally, if that information exceeds $ 200 million and it is stated by sworn statement that it is not a "Large exporting company", the client must submit a certification to that effect issued by an External Auditor or independent Public Accountant (with signature duly certified by the respective Professional Council of Economic Sciences).

That certification shall remain valid for 90 consecutive days from the date to which it refers, without prejudice to the submission of a new sworn statement by the client if applicable.

Version: 2nd. COMMUNICATION "A" 5493
Effective date:
07/11/2013
Page 1

B.C.R.A.	Section 6. Application of the lending capacity of peso deposits and net own liquid resources destined to "Large exporting companies".

6.2. Lending capacity of peso deposits and net own liquid resources destined to "Large exporting companies".

The lending capacity of peso deposits and liquid resources shall be 0.3% of the sum of peso deposits - net of their minimum cash requirement - and the entity's net own liquid resources.

The calculation of deposits shall be made based on the monthly average of daily balances recorded in the previous month.

The net own liquid resources of the previous month shall be considered, taking into account the definitions set forth in point 3.1. of Section 3.

The available lending capacity shall be the positive value obtained by deducting from the amount resulting from the preceding calculation the outstanding covered financing corresponding to "Large exporting companies".

6.3. Application of the lending capacity of peso deposits and net own liquid resources destined to "Large exporting companies".

Financial institutions may only grant new peso financing to the group of clients covered by the definition of "Large exporting companies", without the prior consent of the Central Bank, to the extent that with such disbursements they do not exceed their available lending capacity determined in accordance with the provisions of point 6.2.

For these purposes, new financing covered by this regime shall be understood as that which involves disbursements of funds - whatever the modalities used, whether granted directly, instrumented in the form of financial leasing ("leasing"), negotiable obligations or incorporated by purchase or assignment, including those comprising asset portfolios for which debt securities or participations are held (trusts, mutual investment funds, etc.) - and/or extensions of credit limits assigned for overdrafts on current accounts, renewals, extensions, waits (express or tacit) or any other modality of refinancing with respect to outstanding covered transactions.

Version: 1st. COMMUNICATION "A" 5493
Effective date:
07/11/2013
Page 2

CREDIT POLICY B.C.R.A.
Section 7. Bases of observance.

7.1. Individual basis.

Financial institutions (exclusively including their domestic head offices) shall observe the rules on "Credit policy" on an individual basis.

Those provisions, with the exception of Section 6., shall also apply to foreign branches, to the extent that they operate with resources from the entity's domestic head offices, additional to the assigned capital.

7.2. Consolidated basis.

Without prejudice to compliance on an individual basis, controlling financial institutions subject to consolidated supervision shall observe the rules on "Credit policy", with the exception of Section 6., on a monthly consolidated basis and, additionally and independently, quarterly (excluding their foreign subsidiaries).

Foreign subsidiaries shall be included, to the extent that they operate with resources from the entity's domestic head offices, additional to the participation in capital.

Version: 2nd. COMMUNICATION "A" 5493
Effective date:
07/11/2013
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CREDIT POLICY B.C.R.A.
Section 8. Transitional provisions.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

For all those placements that are constituted by reason of Law 26.476 on externalization and repatriation of capital, the following must be observed:

8.1. Application of lending capacity.

Financial institutions receiving deposits made by application of the provisions of Law No. 26.476 must allocate the resources to special lines of credit to the productive sector in accordance with the regulations of the National Executive Branch, and additionally, in the case of funds raised in foreign currency, the provisions set forth in point 2.1. of Section 2 shall apply.

8.2. Failure to apply.

The failure to apply in pesos shall be subject to an equivalent increase in the minimum cash requirement in pesos, while in foreign currency it shall be subject to the provisions of point 2.7. of Section 2.

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Effective date:
07/11/2013
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CREDIT POLICY

CONSOLIDATED TEXT			SOURCE RULE					OBSERVATIONS
Sect.	Point	Para.	Comm.	Annex	Chap.	Sect.	Point	Para.
5.	5.3.	1st	“A” 2736			6.		Includes interpretive clarification.
		last	“A” 4311
6	6.1		“A” 5493			1.
	6.2.		“A” 5493			1.
	6.3.		“A” 5493			1.
7.	7.1.		“A” 4311					According to Comm. “A” 5493
	7.2.		“A” 4311					According to Comm. “A” 5493
8.	8.1.		“A” 4916			2.
	8.2.		“A” 4916			2.