Decreto 117/04. Regulation of Laws 25.713 and 25.796. Application of CER and CVS — BCRA — AR

"2004 - Year of Antarctica Argentina"
CENTRAL BANK OF THE ARGENTINE REPUBLIC
COMMUNICATION "A" 4103 19/02/2004
TO FINANCIAL ENTITIES:
Ref.: Circular
OPRAC 1 - 567
Decree 117/04. Regulation of Laws
25.713 and 25.796. Application of "CER" and "CVS".

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

Replace point 2.3. of the Annex to Communication "A" 3806 with the following:
"2.3. Debts less than $ 400,000 - article 6° Law 25.713.
Debtors whose indebtedness in the entire financial system is less than $ 400,000 as of 3.2.02, taking into account the last available information at that date in the "Central Registry of Debtors" and who are not included in what is established in points 2.4. and 7.1., may restructure their obligations according to the following guidelines:

2.3.1. Periodic payment obligations:
The date established to carry out the recalculation of the financing converted to pesos through the application of the methodology provided in point 2.1. will be extended until 30.9.02. The debtor may exercise this option until 2.3.04.

2.3.2. Obligations of full payment at maturity.
The Reference Stabilization Coefficient ("CER") accrued and accumulated until 30.9.02 may be paid according to a payment plan that in no case may be fewer than five monthly installments or in a single payment at 120 days from the maturity of the original obligation. The entity must offer the debtor this payment alternative until 2.3.04, granting a deadline until 23.3.04 so that they formulate their option. From 30.9.02 onwards, the Reference Stabilization Coefficient ("CER") and the interest resulting from applying the rate agreed upon, which may not exceed the one corresponding according to what is established in the preceding point 2.1., shall apply to the debt balance and the accumulated amount referred to in the previous paragraph.

Incorporate the following point into the Annex to Communication "A" 3806:
"2.4. Loans originally agreed for amounts greater than US$ 250,000 that have as collateral the unique, family home and permanent occupation, including facilities instrumented under the modality of financial leasing - Article 2° of Annex I to Decree 117/04-.

The procedure established in point 7.2. shall apply until 17.1.03.
From 18.1.03 onwards, the debt balance shall be subject to the application of the Reference Stabilization Coefficient "CER" and to the interest resulting from the rate agreed upon, which may not exceed the one corresponding according to what is provided in point 2.1. Payments made from 18.1.03 to 26.1.04, inclusive, shall be considered as advance payments for services whose maturities occurred during that period. To the recalculated amount for each service, the corresponding amount for each payment made shall be deducted. The resulting balance as of 27.1.04 determined according to the procedure described above, may be restructured by renegotiating the conditions regarding the term so that the amount of the first installment resulting from the restructuring does not exceed the amount of the last installment paid.

Replace the first and second paragraphs of point 7.1. of the Annex to Communication "A" 3806
with the following:
"7.1. Except, given the provisions of Decrees 762/02, 1242/02 and Law 25.713, from the application of the methodology established in point 2. -for the settlement and payment of financing converted to pesos by application of Decree 214/02 and its amendments, including those included in article 6°of Law 25.561, as provided in
article 1°of Decree 320/02- to loans granted to individuals detailed below:
a) that have as collateral the unique, family home and permanent occupation, originally agreed up to the sum of US$ 250,000 or equivalent in another foreign currency. Loans that have guarantees on real estate properties that include a commercial premises or spaces applied to another use, in addition to a housing unit with the conditions cited previously, are also covered. b) with or without mortgage guarantee, originally agreed up to the sum of US$ 12,000 or equivalent in another foreign currency, considering loans individually. c) with pledge guarantee originally agreed up to the sum of US$ 30,000 or equivalent in another foreign currency, considering loans individually. Loans granted to individuals are included -even if they are not accounted for as personal loans- regardless of the allocation or destination to which the debtor had applied, totally or partially, the sums received, taking into account the legal instruments and formalities on which said operation was materialized, also including facilities instrumented under the modality of financial leasing.

By sending you attached the updated text of Communication "A" 3507 and its complementary communications, we salute you very respectfully. CENTRAL BANK OF THE ARGENTINE REPUBLIC Ana María Lemmi Juan Carlos Isi Submanager of Issuance of Norms Manager of Regulatory Inquiries

ANNEX

Convert to pesos, given the provisions of article 3ºof Decree 214/02 and complements,
at a rate of one peso for every United States dollar or its equivalent in other foreign currencies, the balances as of 3.2.02 of foreign currency financing (principal and interest) active as of 5.1.02, regardless of their amount or nature, including those derived from the execution of contingent liabilities, that debtors belonging to the non-financial private sector maintain with financial entities and financial trusts whose asset is constituted by credits transmitted by financial entities. Balances are excluded from this treatment for:

Settlement of financing instrumented through credit cards whose maturity
has operated as of 3.2.02, insofar as they correspond to consumption carried out abroad.
Financing, including contingent liabilities, linked to foreign trade,
in the cases provided for in points 3. and 4.
Contracts for whose compliance foreign law is applicable."

Establish for the settlement and payment of financing converted to pesos, as provided
in the preceding point, the application of the following methodology:

2.1. Periodic payment obligations.
Principal and interest services maturing in the period 4.2/3.8.02 will be paid in pesos on the contractually agreed dates. To this effect, the amount corresponding to the last installment paid prior to 4.2.02 will be converted to pesos at a rate of one peso for every United States dollar or its equivalent in other foreign currencies. Payments made under these conditions will be considered as advance payments for services whose maturities have occurred or will occur from 4.2.02 onwards regarding the capital owed as of that latter date, recalculated as indicated below. The capital owed as of 4.2.02 must be recalculated with the application of the Reference Stabilization Coefficient ("CER") published by the Central Bank of the Argentine Republic. To this end, in the first service maturing from 4.2.02, inclusive, the factor arising from comparing the value of the "CER" of the day prior to said maturity and the value as of 2.2.02 will be taken into account. For subsequent services, the financing balance as of the date of each maturity will be recalculated using the values of the "CER" of the day prior to the maturity of the relevant service and of the day prior to the maturity of the immediately preceding service. To the amount of the recalculated balance for each service, according to the methodology described, the corresponding amount for each payment according to what is provided in the first paragraph

B.C.R.A.
LAWS 25.561, 25.713 and 25.796. DECREES 214/02, 410/02, 762/02 905/02, 992/02, 1242/02, 53/03 and 117/04. REGULATION OF ITS SCOPE FOR ACTIVE OPERATIONS AND INTERFINANCIAL LOANS. (Updated text according to communications “A” 3507, 3561, 3697, 3739, 3762, 3806, 4103 and “B” 7463 and 7572)
Annex to
Com. “A”
4103 of the present point 2.1. and so on until the last service whose maturity occurs until 3.8.02.
The recalculated debt balance will be subject, from 3.2.02, to interest resulting from applying the rate agreed upon, which may not exceed the percentage corresponding according to what is established below:
Interest Rates
-in % nominal annual Individuals Corporations
With preferred guarantees "A", mortgages on real estate, goods in financial leasing that would have been agreed according to the provisions of Law
25.248 on real estate and on motor vehicles and agricultural machines, road and industrial (insofar
that they are registered in the pertinent national vehicle property registry and have a market that allows obtaining a reference value), or fixed pledge with registration in first degree 3,5 6 Others, including financing that has preferred guarantees admitted but whose value does not reach to cover, at minimum, 75% of the financing granted at origin (capital) 5 8 The resulting balance -as of 3.8.02- will be subject to restructuring by renegotiating the conditions regarding term and rates -taking into account the established caps-, so that the amount of the first installment resulting at the moment of debt restructuring does not exceed the amount of the last installment paid according to the originally agreed conditions. The principal and interest services of the restructured debt will be calculated applying the methodology adopted as provided previously. On installments not paid at maturity, compensatory and/or punitive interest may be applied under the conditions freely agreed upon. In the event that the cancellation -total or partial- of the debt takes place prior to 3.8.02, the recalculation of services paid between the cancellation date of the financing and 4.2.02 will be adjusted to the procedure established previously with general character, which will apply with effect to the date when the cancellation occurs.

2.2. Other obligations.
For the cancellation of the owed capital, for the service whose maturity operates in the period 4.2/3.8.02, the debtor will enjoy a waiting period of six months counted from the date of maturity of the obligation, which may not be extended -that wait-beyond 31.8.02. The capital amount as of the originally agreed maturity date will be recalculated until the date of its cancellation, through the application of the Reference Stabilization Coefficient ("CER") according to the methodology established in the preceding point 2.1. The payment of interest services maturing in that period, calculated on the capital resulting from applying said methodology, without exceeding the maximum nominal annual rates established there, will be effected in the terms originally agreed. Refinancings will be subject to the conditions that the financial entity and the borrower freely agree upon, to which the Reference Stabilization Coefficient ("CER") may be applied, taking into account what is established in article 27 of Decree 905/02.

2.3. Debts less than $ 400,000 - article 6° Law 25713.
Debtors whose indebtedness in the entire financial system is less than $ 400,000 as of 3.2.02, taking into account the last available information at that date in the "Central Registry of Debtors" and who are not included in what is established in points 2.4. and 7.1., may restructure their obligations according to the following guidelines:

2.4. Loans originally agreed for amounts greater than US$ 250,000 that have
as collateral the unique, family home and permanent occupation, including facilities instrumented under the modality of financial leasing - Article 2° of Annex I to Decree 117/04-.

Order that the balances as of 3.2.02 of foreign currency financing active as of
5.1.02 for obligations originating in the pre-financing and financing of exports, including those derived from the execution of contingent liabilities, must be cancelled in foreign currency or in pesos according to the exchange rate of the market by which the collection of exports should be settled, provided that the following conditions have been verified:

3.1. Export Pre-financing.

3.1.1. It will be required that the exporter be registered in the exporters' registry and that the financial assistance granted has a relationship with the FOB value of the exports normally carried out by the client.
To this latter effect, the sum of the financings granted to the exporter by this concept with financial entities of the country (counting both the amount of the original disbursements as well as their renewals and/or extensions and the contingent liabilities assumed regarding obligations with banks abroad on which foreign law is applicable) in the period 1.12.00/30.11.01 -according to sworn declaration formulated by the client to the entity- must not exceed 75% of the amount of the export of goods -FOB value-correctly officialized shipping permits and fulfilled by the exporter in the mentioned period. Said sworn declaration must be intervened by other financial entities that may have granted financings by this concept, certifying the agreed amounts. This intervention will constitute a requirement to claim payment of the financing under the conditions referred to in the first paragraph of this point.

B.C.R.A.
LAWS 25.561, 25.713 and 25.796. DECREES 214/02, 410/02, 762/02 905/02, 992/02, 1242/02, 53/03 and 117/04. REGULATION OF ITS SCOPE FOR ACTIVE OPERATIONS AND INTERFINANCIAL LOANS. (Updated text according to communications “A” 3507, 3561, 3697, 3739, 3762, 3806, 4103 and “B” 7463 and 7572)
Annex to
Com. “A”
4103
Together with said sworn declaration, the exporter will deliver to the financial entity an authorization with duly certified signature that enables the entity to request data related to shipments carried out in the mentioned period, before the respective dependency of Customs. In the event that the total of the financings is greater than 75% of the value of the exports, even though it has been established that the destination of the assistance was export pre-financing, the part of the debt as of 3.2.02 resulting from applying the proportion that the excess of said amount represents with respect to the total of financings will be subject to what is provided in the first paragraph of point 1. For this effect and also to determine the amount to cancel in foreign currency or in pesos at the corresponding market exchange rate, when there is financing active granted by more than one entity, each of them will affect each of these items the proportion that its active financing represents in relation to the debt balance. Extensions of maturity of financings agreed due to postponements in the shipment of exported products, provided that the delay does not exceed 60 calendar days counted from the originally declared shipment date, will not be considered for the purposes of calculating the preceding relationships, and financings must be computed by the originally disbursed amount and subsequent refinancings. In the absence of presentation of the sworn declaration by the exporter of the financings included and/or of the pertinent authorization to the financial entity for the verification of data related to shipping permits, within 15 calendar days counted from the date on which it was requested reliably (or through written notification in which receipt is recorded by signature of the exporter or their legal representative, by themselves or through attorneys), the financial entity will apply definitively the procedure established previously based on the information it has available, taking into account that, in case the mentioned authorization has been omitted, it may use alternative elements it deems reasonable at its discretion to establish the amount of the corresponding exports. Financial entities that may have granted financings by this concept will have 5 business days to certify, at the formal request of the exporter, the agreed amounts, assuming the entity responsibility towards the exporter for omissions incurred without prejudice to the application, if applicable, of article 41 of the Financial Entities Law. Furthermore, in case of not issuing within the established term, the balances of financings with this destination maintained in the entity that incurs in said breach will be subject to what is provided in the first paragraph of point 1.

3.1.2. If any of the conditions established in the first paragraph of
point 3.1.1. are not verified, nevertheless the financings will remain in foreign currency, provided that:

B.C.R.A.
LAWS 25.561, 25.713 and 25.796. DECREES 214/02, 410/02, 762/02 905/02, 992/02, 1242/02, 53/03 and 117/04. REGULATION OF ITS SCOPE FOR ACTIVE OPERATIONS AND INTERFINANCIAL LOANS. (Updated text according to communications “A” 3507, 3561, 3697, 3739, 3762, 3806, 4103 and “B” 7463 and 7572)
Annex to
Com. “A”
4103 a) there is an irrevocable letter of credit opened abroad in favor of the pre-financing borrower, or b) a sales contract has been signed with the importer of the destination country, or c) there is a firm purchase order, opened in favor of the pre-financing borrower, specifying the condition of the operation, background and references of the buying firm and certification -in each case- of the signatures signing the contract or purchase order, or d) a production plan for the goods to be exported has been presented, an export program to be fulfilled within the validity period of the financing and an estimated cash flow for its execution justifying the line of credit granted. The fulfillment of the requirements established in letters a) to d) must have been verified prior to 5.1.02, which must be presented in the granting entities as supporting element of the credits granted. Financings granted to domestic producers by this concept associated with the existence, prior to 5.1.02, of sales contracts of the merchandise to be produced to an exporter will also remain in foreign currency, provided that the settlement of the operation is effected at the price of the product according to the quotation in the market of the country or abroad that has been agreed or with a fixed price in foreign currency for whose settlement the exporter manifests their commitment to apply the exchange rate arising from the single and free exchange market. These contracts must fulfill, when feasible according to the nature of the product or by legal requirements, one of the following conditions:
I. having been registered before 5.1.02 in a stock exchange in the country in which trading with the product in question takes place, or
II. having been instrumented under the form of a futures transaction issued,
before 5.1.02, through a forward market subject to the control of the National Securities Commission, or
III. having paid, before 5.1.02, the respective stamp tax in the
jurisdictions that tax instrumental acts with that levy.
The financial assistance granted must bear a relationship with the amounts involved according to the different cases, taking into account that the debt must not exceed 75% of the estimated FOB value of the export, with what is provided in point 3.1.1. being applicable.

3.2. Export Financing.
The existence of shipping documentation of the exported goods prior to the disbursement of funds will be a requirement.

B.C.R.A.
LAWS 25.561, 25.713 and 25.796. DECREES 214/02, 410/02, 762/02 905/02, 992/02, 1242/02, 53/03 and 117/04. REGULATION OF THEIR SCOPE FOR ACTIVE OPERATIONS AND INTERBANK LOANS. (Text updated according to communications “A” 3507, 3561, 3697, 3739, 3762, 3806, 4103 and “B” 7463 and 7572)
Annex to
Comm. “A”
4103

When, according to the cases previously provided for, the conditions indicated are not met, the balances of the financing included therein shall be subject to the provisions of the first paragraph of point 1.

Order that the balances as of 3.2.02 of the financing, including those derived from the execution of contingent liabilities, in foreign currency valid as of 5.1.02 linked to import operations, must be cancelled in foreign currency or in pesos according to the applicable exchange rate, at the time of cancellation, for transactions of the single and free foreign exchange market.

This treatment excludes, and therefore subjects to the provisions established in the first paragraph of point 1., the financing that matured by 3.2.02 with respect to which one of the following conditions had been verified by that date:

the intervening financial institution had not effected its cancellation by the agreed maturity date (considering the effect of implicit extensions due to foreign exchange holidays), with the necessary amounts available in an open account in the name of the importer at that institution, and also having all the documentation linked to the import (customs clearance, etc.); or
they have been subject to a second refinancing - including renewals, implicit or explicit forbearance - with or without express request to that effect by the borrower, except as provided in the previous section. For these purposes, implicit forbearance will be considered a second refinancing to the extent that more than 60 days have elapsed from the maturity of the first.

Convert to pesos, pursuant to the provisions of article 2 of Decree 410/02, at the rate of one peso with forty cents ($ 1.40) for each United States dollar or its equivalent in other currencies, the balances as of 3.2.02 of interbank obligations - for principal and interest - in foreign currency, allowing the early cancellation of the said obligations.

The conversion is excepted for interbank obligations, including those originated in operations with second-degree financial entities, destined for the granting of assistance to clients for the prefinancing and financing of exports and imports, and for the attention of expenditures linked to such operations, which shall be processed through the single and free foreign exchange market.

Convert to pesos, pursuant to the provisions of article 2 of Decree 992/02, at the rate of one peso with forty cents ($1.40) for each United States dollar or its equivalent in other currencies, the obligations to pay sums of money expressed in United States dollars or in another foreign currency in all futures and options contracts including forward operations contracted under Argentine legislation existing as of 5.1.02, where at least one of the parties is a financial entity, matured or to mature by 12.6.02 that at this date were pending settlement.

Application of the Coefficient of Variation of Salaries (“CVS”)

7.1. Except, pursuant to the provisions of Decrees 762/02, 1242/02 and Law 25.713, from the application of the methodology established in point 2 -for the settlement and payment of financing converted to pesos by application of Decree 214/02 and its amendments, including those included in article 6 of Law 25.561, as provided in article 1 of Decree 320/02- to loans granted to natural persons detailed below:

a) that have as mortgage guarantee the single, family home and permanent occupation, originally agreed up to the sum of US$ 250,000 or equivalent in another foreign currency.

Loans that have guarantees on real estate that include a commercial premises or spaces applied to another use, in addition to a housing unit with the conditions cited above, are also covered.

b) with or without mortgage guarantee, originally agreed up to the sum of US$ 12,000 or equivalent in another foreign currency, considering the loans individually.

c) with pledge guarantee originally agreed up to the sum of US$ 30,000 or equivalent in another foreign currency, considering the loans individually.

Loans granted to natural persons are included - even if not accounted for as personal - regardless of the assignment or destination to which the debtor had applied, totally or partially, the sums received, taking into account the legal instruments and formalities on which the operation was materialized, including also facilities implemented under the financial leasing modality.

In the event that doubts or discrepancies persist between the parties, the elements on which the operation was based (such as origin and nature of the obligation assumed, application or allocation of the funds granted to the debtor) will be considered.

In cases where the condition that the guarantee established in item a) must meet does not arise from the legal instruments (loan contract, bill of sale, title deed or deed), the debtor must prove such condition through a sworn statement with certified signature, at the debtor's option, by a public notary, judicial authority, public authority or by a financial entity.

The creditor financial entity may verify or confirm, at no cost to the debtors, the condition of “single, family home and permanent occupation” while the mortgage guarantee subsists.

The debtor balances of checking accounts and credit or consumption cards are not covered by the established exception.

7.2. Establish that during the period 4.2/30.9.02 the interest of the loans referred to in the preceding point 7.1. shall be calculated at the interest rate in force for each operation on 2.2.02. The installments - for principal and interest - accrued during said period shall be settled in pesos. Payments made under these conditions shall have the effect of cancelling such obligations.

In the event that prepayments have been made, the amounts paid by the debtor originated from the application of the Reference Stabilization Coefficient (“CER”), according to the methodology established in point 2., shall be imputed to the cancellation of the subsequent immediate services - for principal and interest. If no such obligations exist, at the debtor's request, the financial entity must credit the corresponding amount for this concept in an account in the name of the debtor.

From 1.10.02 to 31.3.04, the said loans shall be subject to the Coefficient of Variation of Salaries (“CVS”) which will be prepared by the Institute of Statistics and Censuses (INDEC). From 1.4.04, no update coefficient shall apply with respect to such obligations.

The interest rate to be applied in each of the classes of loans (items a) to c) of point 7.1.), from 1.10.02, shall be the nominal annual rate agreed in the original contract, valid on 2.2.02, or the average of the rates for each class in force in the financial system during the year 2001 published by the Central Bank (Communication “B” 7541), whichever is lower of the two.

For the purpose of determining the principal and interest installment that the loan will accrue from 1.10.02 and when the value of the installment calculated according to the present provisions is lower than that corresponding to the installment accrued in the previous period, the financial entity may establish that the service amount is equal to the latter installment, applying to the cancellation of the principal - under the terms provided in the contract - the difference resulting between it and the installment that arises from the new conditions.

7.3. Order that financial entities must notify - at least by registered letter with return receipt - to the debtor regarding:

a) Their acceptance of the destination as “single, family home and permanent occupation”.

In case such condition is not proven, the entity must notify effectively that the loan will be subject to the provisions established in point 2.

b) The interest rate that will apply to the loan from 1.10.02, in accordance with what is established in point 7.2.

c) The resulting modifications in the loan balance and in the payment obligations on the debtor.

The client file must record the new conditions to which the loans will be subject by application of the respective Decrees, the manner in which the relevant information was processed, and, if applicable, the notification made.

It will be at the discretion of the financial entities to adopt the instrumental safeguards they deem necessary for the purpose of protecting their rights.

The scope of the concept “single, family home and permanent occupation” referred to in point 7.1.a), will include those cases in which the three conditions are met concurrently.

Consequently, the Coefficient of Variation of Salaries (CVS) will only apply to loans that are guaranteed with the only property that the debtor owns and that also meets the requirement of being the family home of permanent occupation, understanding by the latter concept the place of residence for the greater part of the year.

Export Prefinancing
Application Examples (Modification Communication "A" 3507-point 3.1.1.-)

Case 1: total credits granted under the concept of export prefinancing in the period exceeds 75% of the FOB value of exports in the same period a) Total of credits period 1.12.00 to 30.11.01 2,000 b) Total of exports in that period 1,000 c) 75% of total exports (b x 75%) 750 d) Excess [Max (a-c, 0)] 1,250 (credit not linked to exports) e) Excess / total credits (d/a) 62.5% (proportion of debt to be converted to pesos) f) Complement (100% - e) 37.5% (proportion of debt not converted to pesos) g) Outstanding debt balance as of 3.2.02 800

Banks Credits granted Outstanding debt balance as of 3.2.02 Debt distribution as of 3.2.02 Debt to be converted to pesos (62.5%) Debt not converted to pesos (37.5%)
1.12.00 - 30.11.01
"A" 600 320 40% 200 120
"B" 1000 480 60% 300 180
"C" 400 0 0
TOTAL 2000 800 100% 500 300

Case 2: total credits granted under the concept of export prefinancing in the period DOES NOT exceed 75% of the FOB value of exports in the same period a) Total of credits period 1.12.00 to 30.11.01 2,000 b) Total of exports in that period 3,000 c) 75% of total exports (b x 75%) 2250 d) Excess [Max (a-c, 0)] 0 (credit not linked to exports) e) Excess / total credits (d/a) 0% (proportion of debt to be converted to pesos) f) Complement (100% - e) 100% (proportion of debt not converted to pesos) g) Outstanding debt balance as of 3.2.02 800

Banks Credits granted Outstanding debt balance as of 3.2.02 Debt distribution as of 3.2.02 Debt to be converted to pesos (0%) Debt not converted to pesos (100%)
1.12.00 - 30.11.01
"A" 600 320 40% 0 320
"B" 1000 480 60% 0 480
"C" 400 0 0
TOTAL 2000 800 100% 0 800

Lineage: No known changes