Minimum Capital of Financial Entities. Distribution of Results. Update.

"2020 - YEAR OF GENERAL MANUEL BELGRANO" COMMUNICATION "A" 7007 11/05/2020 TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 882
CONAU 1 - 1408
Minimum Capital of Financial Entities. Distribution of Results. Update. ____________________________________________________________ We address you to deliver the sheets attached, which, in replacement of those previously provided, must be incorporated into the regulations referenced, based on the resolutions disseminated through Communications "A" 6938, 6939, and 6946. Finally, we remind you that on this Institution's website www.bcra.gob.ar, by accessing "Financial System – LEGAL AND REGULATORY FRAMEWORK – Regulations and Summaries – Ordered Texts of General Regulations," you will find the modifications made with text highlighted in special characters (strikethrough and bold). We salute you attentively. CENTRAL BANK OF THE ARGENTINE REPUBLIC Matías A. Gutiérrez Girault Darío C. Stefanelli Manager of Issuance of Regulations Principal Manager of Issuance and Regulatory Applications

ANNEX

11.1. Acquisitions of financial entities.
For the purposes of determining the computable equity responsibility on a consolidated basis, the consolidating entity may add the amount recorded in the specific item under Provisions of Liabilities.

11.2. Merger of financial entities.
For the purposes of determining the computable equity responsibility, the amount corresponding to the "negative business goodwill" recorded in the specific item under Provisions of Liabilities may be added.

11.3. For the purposes of determining the computable equity responsibility, starting from 1.2.13, instruments that cease to meet the criteria to be considered Level 1 Additional Capital (CAn1) or Complementary Equity (PNc) will be excluded, as established in Section 8.
For these purposes, while maintaining the conditions under which their inclusion in the Computable Equity Responsibility (RPC) was previously admitted, the amount resulting from applying the methodology in force at the end of each month to the accounting values of the instruments as of the end of that month will be computed. Their recognition as RPC will be limited to 90% of the value thus obtained from that date, with this limit decreasing by 10 percentage points every twelve months. This limit will be applied separately to each instrument –whether computed in CAn1 or in PNc–.

11.4. For the purposes of determining the computable equity responsibility, Group "A" financial entities may compute as Level 1 Ordinary Capital (COn1) the positive difference between the new accounting provision computed according to point 5.5 of IFRS 9 and the "regulatory" provision calculated according to the regulations on "Minimum Provisions for Credit Risk" or the accounting provision corresponding to the balance sheet of 30.11.19 –whichever is higher–.

MINIMUM CAPITAL OF FINANCIAL ENTITIES
B.C.R.A.
Section 11. Transitional Provisions.
Version: 10a. COMMUNICATION "A" 7007
Validity:
20/03/2020

MINIMUM CAPITAL OF FINANCIAL ENTITIES
ORDERED TEXT SOURCE REGULATION
Section Point Paragraph Com.
Cap./
Annex
Point Paragraph
OBSERVATIONS
11.1. "A" 3985 According to Com. "A" 4172.
11.2. "A" 3985 According to Com. "A" 4172.
11.3. "A" 5369 8. According to Com. "A" 5580.
11.
11.4. "A" 6938 12. According to Com. "A" 7007.

7.1. The countercyclical capital buffer margin that financial entities must apply to their exposures in Argentina, as established in point 4.2., is set, starting from 1.4.16, at 0%.

7.2. For the purposes of determining distributable results, the increases in computable equity responsibility (RPC) resulting from the application of point 11.4 of the regulations on "Minimum Capital of Financial Entities" and the lower provisions and higher RPC resulting from the treatments established in point 2 of Communication "A" 6946 (and amendments) –for financing to Small and Medium Enterprises (SMEs) destined for the payment of salaries– and in point 13 of Communication "A" 6938 –which deferred until 1.1.21, for Group "B" financial entities, the application of point 5.5 of IFRS 9–, must be deducted from the computations provided for in Sections 2. and 3.

7.3. The distribution of results of financial entities is suspended until 30.6.2020.

DISTRIBUTION OF RESULTS
B.C.R.A.
Section 7. Transitional Provisions.
Version: 5a. COMMUNICATION "A" 7007
Validity:
27/03/2020

ORDERED TEXT SOURCE REGULATION OBSERVATIONS Sec. Point Par. Com. Annex Cap. Sec. Point Par. 1. "A" 4589 1. According to Com. "A" 5827 and 6464. 1st and 2nd "A" 4589 2. According to Com. "A" 4591 (point 6.), 5273, 5827, 6327 and 6464.
2.1. "A" 6327 12.
2.2. "A" 6396 4.
2.3. "A" 6327 12.
2.4. "A" 4589 2.3.
2.5. "A" 4589 2.4.
2. last "A" 6327 26.
1st "A" 4589 3. According to Com. "A" 4591 (point 8.), 5072, 5273, 5827, 5985, 6464 and "B" 9104.
3.1. "A" 4589 3.1. According to Com. "A" 4591 (point
8.) and 6428.
3.2. "A" 4589 3.3. iv) According to Com. "A" 4591 (point
8.) and "B" 9104.
3.3. "A" 4589 3.3. According to Com. "A" 4591 (point
8.), 6428 and 6464.
3.4. "A" 5737 4.
3. last "A" 4589 1.1. a
1.4.
According to "A" 4591, 5072 and
6464.
4. "A" 5827
"A" 4591 1. According to Com. "A" 5282 and 5827.
5.1. "A" 4591 1. Incorporates the interpretative criterion of Com. "C" 46841.
5. According to Com. "A" 5393.
5.2. "A" 4591 1. According to Com. "A" 4686, 4702,
5072, 5180, 5282, 5369,
5580, 5827, 6013, 6464 and
"B" 9104.
6. "A" 6768
7.1. "A" 5938
7. 7.2. "A" 6946 3. According to Com. "A" 7007.
7.3. "A" 6939 According to Com. "A" 7007.
B.C.R.A.
ORIGIN OF THE PROVISIONS CONTAINED IN THE REGULATIONS ON "DISTRIBUTION OF RESULTS"