Instructions of Banco de Portugal

Instruction No. 2/2004

SUBJECT: Limitations on the granting of credit established by Articles 85 and 109 of the RGICSF

Considering that, under the terms of paragraph 1 of Article 85 of the General Regime for Credit Institutions and Financial Companies (RGICSF), approved by Decree-Law No. 298/92 of 31 December, credit institutions may not grant credit, in any form or modality, including the provision of guarantees, and directly or indirectly, to the members of their management bodies or to the members of their supervisory body, or to companies or other collective entities directly or indirectly controlled by them;

Considering that, under the terms of paragraph 2 of the same article, the indirect nature of the granting of credit is presumed when the beneficiary is the spouse, relative or relative by marriage in the 1st degree of any member of the management or supervisory bodies or a company directly or indirectly controlled by any one or some of those persons;

Considering that, in accordance with paragraphs 5 and 6 of the aforementioned article, the above-mentioned prohibition does not apply to the members of the general council, to the non-executive directors of credit institutions and to companies or other collective entities controlled by them, although Banco de Portugal may determine the application of Article 109 of the RGICSF to those entities and to the members of other bodies that it considers to perform equivalent functions, as well as to the companies or other collective entities controlled by them;

Considering that the aforementioned Article 109 of the RGICSF establishes, directly, limitations on the granting of credit to persons who hold a participation in a credit institution and to the companies that those persons directly or indirectly control or with which they are in a group relationship;

Considering that, under the terms of Article 120 of the RGICSF, institutions are obliged to submit to Banco de Portugal the information necessary to verify compliance with the legal and regulatory rules governing their activity and the effectiveness of their internal controls;

Banco de Portugal, in the exercise of the competence conferred on it by Article 17 of its Organic Law and taking into account the provisions of paragraph 1, subparagraphs b) to e), of Article 120 of the General Regime, determines the following:

a) Credit institutions must have an updated list of all entities covered by Article 85 of the RGICSF, with an indication of the amounts of the liabilities of each of those mentioned in paragraph 5 thereof;

b) If the list includes entities related to each other under the terms provided for in the said article, that circumstance must be expressly mentioned;

c) With the exception of the current year, for which the deadline of 31 March is established, a copy of the list prepared under the terms of the preceding subparagraphs must be sent to Banco de Portugal by 31 January, with reference to 31 December of the previous year;

d) Any change occurring in relation to the elements contained in the same list must be communicated to Banco de Portugal within 30 days from the knowledge of the fact in question;

e) Credit institutions must also have an updated list of all entities directly covered by paragraph 1 of Article 109 of the RGICSF, with an indication of the liabilities of each one.