Instruction No. 1/2022

Instruction No. 1/2022 BO No. 12/2021 3rd Supplement • 2022/01/10 .................................................................................................................................................................................................. Topics Markets :: Money Markets Mod. 99999940/T – 01/14 Index Text of the Instruction Text of the Instruction Subject: Implementation of monetary policy – Additional temporary measures Taking into account the teleworking situation due to COVID-19, the Board of Directors decided on April 7, 2020, to suspend the submission by Bank of Portugal counterparties of authenticated lists within the framework of mobilizing portfolios of credit rights secured by mortgages. Taking into account the low level of variation in the mobilized credit rights monthly and the ongoing alteration to the Bank Loans Processing System (TEB) which will allow changing the assessment and control of credit rights currently performed monthly to daily, the obligation to submit the list was changed from monthly to semi-annual. It was also deemed necessary to introduce some clarifications regarding the rules applicable to the reporting of credit rights portfolios to the data repository designated by the Eurosystem. Thus, in the exercise of the competence attributed to it by Articles 12, 15, 16, and 24 of its Organic Law, approved by Law No. 5/98 of January 31, in its current version, the Bank of Portugal determines the following: Instruction No. 7/2012 (BO No. 3, of 15-03-2012) is amended as follows:

1. Annex I is amended as follows: 1.1. Clause 3 is renumbered as Clause 5, and the current Clauses 4 and 5 are renumbered respectively as Clauses 3 and 4. 1.2. New Clause 3, number 3, is amended, taking the following wording:
2. The opening of credit will only take place after validation by the Bank of the Authentication Term and its respective documentation, as established in number 1 of Clause 5. 1.3. New Clause 5 takes the following wording:

Instruction No. 1/2022 BO No. 12/2021 3rd Supplement • 2022/01/10 Topics Markets :: Money Markets .................................................................................................................................................................................................. Mod. 99999940/T – 01/14 Clause 5 Counterparty Obligations

1. The Counterparty, prior to the mobilization of the portfolio as collateral, must send a certified private document via Authentication Term, in accordance with applicable legislation, for the purpose of constituting a financial pledge, from which the elements established in the Transfer Manual, regarding the Reporting of Credit Rights Portfolios, made available by the Bank in the BPnet System (section “Implementation of Monetary Policy”, under the title “Bank Loans”), hereinafter designated “Transfer Manual”, must be stated.
2. Notwithstanding the provision in number 4 of Article 11 of Decree-Law No. 105/2004, the Bank may, at any time, require the Counterparty to register the financial pledge on the committed credit rights at the Land Registry Office.
3. The Counterparty has two business days to carry out the registration referred to in the previous number.
4. It is the sole responsibility of the Counterparty to carry out the Authentication Term, the registration of the financial pledge in favor of the Bank at the Land Registry Office, in accordance with number 2, as well as the payment of all expenses related to the carrying out of the aforementioned acts.
5. Without prejudice to the provisions in the previous numbers, the Bank may, at any time, proceed with the registration referred to in this clause. 1.4. Clause 6, number 1, is amended, taking the following wording: The Counterparty undertakes to:
6. Send to the Bank, a) Semi-annually, a certified private document via Authentication Term referred to in number 1 of Clause 5, duly updated with amortizations, settlements, and defaults of debtors, including new credit rights (replenishment), without prejudice to the Bank’s ability to request a new list at any time. b) Monthly, the file detailed in Annex IV of the Instruction with the detailed information regarding each of the credit rights that constitute the portfolio. c) Monthly, a declaration confirming that the credit rights included in the file indicated in item b) are in effective credit condition and in a regular situation, and, if applicable, that their reported PD and LGD originate from models approved by the Bank.

Instruction No. 1/2022 BO No. 12/2021 3rd Supplement • 2022/01/10 Topics Markets :: Money Markets .................................................................................................................................................................................................. Mod. 99999940/T – 01/14 d) Whenever changes occur, information on the total value of the additional credit rights portfolio in debt, net of their respective amortizations, settlements, and defaults of debtors. 2. Annex IV is amended as follows: 2.1. In number 1, D, items c) and d) are amended, taking the following wording: c) Semi-annually, when applicable, the list attached to the portfolio contracts must be updated in accordance with the file referred to in item a) and according to what is defined in the Transfer Manual, without prejudice to the Bank’s ability to request a new list at any time, d) Monthly, the file referred to in item a) must be accompanied by a declaration, according to the format defined in the Transfer Manual. 2.2. In number 2, 2.2.1 Item e) is amended, and takes the following wording: e) Failure to comply with this reporting for all credit rights included in portfolios, according to the deadlines established in this Instruction and the rules defined in the following items, implies the loss of eligibility of the portfolio(s). 2.2.2 Items f), g), and h) are added, which have the following wording: f) Credit rights portfolios must present a minimum mandatory compliance level of data classification of A1, assigned by the data repository designated by the Eurosystem and with reference to the availability of information in the mandatory fields of the data reporting models. The classification is obtained according to the methodology established in item h). After individual analysis, based on the reasons presented for not obtaining the required classification, the Eurosystem may accept credit rights portfolios with a classification lower than the required classification (A1). This individual assessment depends on the completion and sending to the Bank of Portugal of a specific form, available in the BPnet system (section “Implementation of Monetary Policy”, under the title “Bank Loans”). g) For the completion of fields for which information is not available, a set of six “no data” (ND) options is provided in each of the data reporting models. These options must be used whenever certain data foreseen in the model cannot be submitted.

Instruction No. 1/2022 BO No. 12/2021 3rd Supplement • 2022/01/10 Topics Markets :: Money Markets .................................................................................................................................................................................................. Mod. 99999940/T – 01/14 Table 2: Explanation of “No data/ND” options “No data” Options Explanation ND1 Data not collected because they are not required by underwriting criteria ND2 Data collected at the time of the request but not entered into the data reporting system at the time of the operation ND3 Data collected at the time of the request, but entered into a system distinct from the data reporting system ND4 Data collected but only available from MM-YYYY [month/year] ND5 Not relevant ND6 Not applicable in the jurisdiction h) The data repository generates and assigns a score to each reporting model associated with credit rights portfolios, upon submission and processing of loan data. This result reflects the number of mandatory fields containing ND1 and the number of mandatory fields containing ND2, ND3, or ND4, compared, in each case, with the total number of mandatory fields. Options ND5 and ND6 can only be used if the relevant data fields of the data reporting model for the loans in question allow it. The combination of the two reference limits produces the following result matrix: Table 3: Results of loan data Result value matrix ND1 Fields 0 ≤ 10 % ≤ 30 % > 30 % ND2 or ND3 or ND4 0 A1 B1 C1 D1 ≤ 20 % A2 B2 C2 D2 ≤ 40 % A3 B3 C3 D3

40 % A4 B4 C4 D4

3. The expression “BdP” is replaced by the expression “Bank”.
4. This Instruction enters into force the day after its publication.
5. This Instruction is republished in its entirety, being available at https://www.bportugal.pt/instrucao/72012