2018 - YEAR OF THE CENTENARY OF THE UNIVERSITY REFORM

COMMUNICATION “A” 6586
12/10/2018

TO FINANCIAL INSTITUTIONS:
Ref.: Circular
LISOL 1 - 808

"Minimum capital of financial insti- tutions". "Liquidity coverage ratio".
Adjustments.

We address you to inform you that this Institution adopted the resolution that, in its pertinent part, provides:

“1. Replace point 2.4.4.2. of the rules on “Minimum capital of financial institutions” with the following:

“2.4.4.2. MSMEs (including financing to natural persons for the development of their professional activity): the amount equivalent in pesos of € 1.000.000 (in line with international standards) at the seller's exchange rate of the Banco de la Nación Argentina at the close of operations of the last business day of the previous month of the one in question.”

2. Replace point 4.2.1. of the rules on “Liquidity coverage ratio” with the following:

“4.2.1. Unsecured wholesale funding provided by MSMEs.

This funding will receive the treatment provided by point 4.1. applicable to retail deposits, for which a distinction must be made between “Stable funding provided by MSMEs” and “Other funding provided by MSMEs”.

It includes deposits and other sources of funds obtained from MSMEs that financial institutions manage with the criteria applied to the retail sector and whose liquidity risk is considered to generally present characteristics similar to retail sources of funds, provided that the total aggregate funding obtained from the MSME is less than the amount equivalent in pesos of € 1.000.000 (in line with international standards) at the seller's exchange rate of the Banco de la Nación Argentina at the close of operations of the last business day of the previous month of the one in question – jointly for the economic group when applicable, taking into account the criterion established by the enforcement authority of Law 24.467 (and its amendments) –.

“Aggregate funding” means the sum of the gross amount – without offsetting any form of financing granted to the MSME – of all forms of funding. Furthermore, the application of the limit jointly means that when there are one or more MSMEs belonging to the same economic group they must be considered as a single creditor, so that the limit applies to the total funding received from that group of clients.

The factors established in point 6.1.2.1. will be applicable.”

On the other hand, we send you in annex the sheets that, replacing those previously provided, should be incorporated into the rules of reference. Likewise, it is recalled that on the page of this Institution www.bcra.gob.ar, accessing “Financial System - LEGAL AND REGULATORY FRAMEWORK - Compilations and summaries - Ordered texts of general regulations”, 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

Darío C. Stefanelli
Principal Manager of Issuance and Regulatory Applications

Agustín Torcassi
General Deputy Manager of Regulations

ANNEX

MINIMUM CAPITAL OF FINANCIAL INSTITUTIONS
B.C.R.A.
Section 2. Minimum capital for credit risk.

2.4.3. Concentration criterion.

The portfolio must be diversified. For this purpose, the total exposure with each debtor must not exceed 0.2 % of the entity's total retail portfolio, without considering financing with more than 90 days of arrears.

To calculate the limit defined in the preceding paragraph, the cited percentage will be applied to the balance of the retail portfolio at the end of the month prior to the month to which the balances used to determine the requirement refer. Debtors whose balance of computable exposures at the end of the month referred to in the second term exceed that limit may not be computed within the retail portfolio.

2.4.4. Limit.

The maximum exposure to a single debtor must not exceed, at the time of the agreement, the following amounts:

2.4.4.1. Natural persons – consumer portfolio –: the amount equivalent to 75 (seventy-five) times the Minimum, Vital and Mobile Wage established by the National Council of Employment, Productivity and the Minimum, Vital and Mobile Wage for monthly workers who complete the full legal workday, in force at the close of the month prior to the month in question.

2.4.4.2. MSMEs (including financing to natural persons for the development of their professional activity): the amount equivalent in pesos of € 1.000.000 (in line with international standards) at the seller's exchange rate of the Banco de la Nación Argentina at the close of operations of the last business day of the previous month of the one in question.

For the purposes of considering in the retail portfolio the credits incorporated through a portfolio purchase, the necessary information must be available to verify compliance with the criteria and limits detailed above.

2.5. Criteria for the determination of risk-weighted assets.

2.5.1. The risk weights established in point 2.6. will be applied.

2.5.2. The term “exposure” encompasses all financing granted by the entity – in its different modalities, such as loans, holdings of securities, guarantees, sureties and other contingent liabilities –, including those arising from operations carried out in the securities, currency and derivatives markets.

Version: 5a. COMMUNICATION “A” 6586
Effective date:
13/10/2018
Page 5

B.C.R.A.
ORIGIN OF THE PROVISIONS CONTAINED IN THE RULES ON “MINIMUM CAPITAL OF FINANCIAL INSTITUTIONS”

ORDERED TEXT			SOURCE RULE
Section	Point Paragraph	Comm.	Ch./ Annex	Point Paragraph
1.	1.1.		"A" 2136	1.	1st	According to Comm. "A" 2859, 3558, 5272, 5369, 5580 and 5867.
	1.2.		"A" 2241 CREFI-2	I	1.3.1.	According to Comm. "A" 4368, 4771, 5168, 5351, 5355, 5983 and 6260.
	1.3.		"A" 2136	2.	1st	According to Comm. "A" 2223.
	1.4.1.		"A" 2136	3.1.
	1.4.2.1.		"A" 3171			According to Comm. "A" 3959.
		i)	"A" 2136	3.2.	2nd	According to Comm. "A" 3959.
		ii)	"A" 2136	3.2.4.		According to Comm. "A" 2241, 4771 and 6275.
		iii)	"A" 414 LISOL-1	VI	6.1.
	1.4.2.2.		"A" 3171			According to Comm. "A" 3959.
2.	2.1.		"A" 2136	1.		According to Comm. "A" 2541, 2736, 2938, 3039, 3307, 3959, 4598, 4702, 4741, 4742, 4961, 4996, 5180, 5369 (Annex I), 5580, 5867, 6128, 6260, 6327 and "B" 9745.
	2.2.1.		"A" 2136	I		According to Comm. "A" 2541 (annex, criteria, d, 2nd paragraph).
	2.2.2.		"A" 2287	5.		According to Comm. "A" 5369 (Annex I).
	2.2.3.		"A" 2412			According to Comm. "A" 3959, 5369 (Annex I), 5671 and 5740.
	2.3.		"A" 2740	I	3.4.	According to Com. “A” 5369 (Annex I).
	2.3.1.		“A” 2768	2.		According to Com. “A” 2948, 3911, 3925, 3959, 4180, 5369 (Annex I), 5831 and “B” 9074.
	2.3.2.		“A” 2227 único	5.2.2.	3°
	2.4.		“A” 5369	I
		último	“A” 5580			Includes interpretive clarification.
	2.4.1.		“A” 5369	I
	2.4.2.		“A” 5369	I
	2.4.3.	1°	“A” 5369	I
		2°	“A” 5580			According to Com. “A” 5831.
	2.4.4.		“A” 5369	I		According to Com. “A” 5831, 6489, 6531 and 6586.
	2.5.1.		“A” 2136	1.1.		According to Com. “A” 5369 (Annex I) and 6260.
		1°	“A” 5369	I
	2.5.2.	2°	“A” 5580			According to Com. “A” 5831 and 6327.
		3°	“A” 5580
	2.5.3.		“A” 5369	I		According to Com. “A” 5821.
	2.5.4.		“A” 5369	I		According to Com. “A” 5580.

LIQUIDITY COVERAGE RATIO
B.C.R.A.
Section 4. Total cash outflows.

Wholesale funding computable for the purposes of determining the LCR is defined as all funding that is due within the 30-day horizon or whose nearest contractual maturity date falls within said horizon – such as term deposits and debt securities –, as well as funding with an indefinite maturity term.

All sources of funding that grant the provider of funds the option to accelerate the withdrawal of its investment so that the return of funds must be effected within the 30-day horizon, or grant the financial institution the option to redeem it early within said term, when it is feasible that the financial institution decides to exercise the option for reputational reasons, must be included.

The following is excluded:

i) wholesale funding that can be cancelled early by the provider of funds, but subject to a notice period provided for in the contract that exceeds the 30-day horizon;

ii) obligations related to derivative contracts; and

iii) deposits contractually pledged as collateral for financing granted by the financial institution if all of the following conditions are met:

the financing will not mature or be cancelled in the next 30 days;
the collateral contract does not allow the deposit to be withdrawn prior to the payment or total cancellation of the financing;
the amount to be excluded will not be greater than the balance of the financing or the drawn balance, in the case of a credit facility.

When the deposit is pledged as collateral for an unused credit facility, the greater of the factors corresponding to the unused facility and the deposit pledged as collateral must be applied.

Unsecured wholesale funding comprises the categories indicated below.

4.2.1. Unsecured wholesale funding provided by MSMEs.

This funding will receive the treatment provided for in point 4.1. applicable to retail deposits, for which a distinction must be made between “Stable funding provided by MSMEs” and “Other funding provided by MSMEs”.

It comprises deposits and other sources of funds obtained from MSMEs that financial institutions manage with the criteria applied to the retail sector and whose liquidity risk is considered to generally present characteristics similar to retail sources of funds, provided that the total aggregate funding obtained from the MSME is less than the peso equivalent of € 1.000.000 (in line with international standards) at the selling exchange rate of the Banco de la Nación Argentina at the close of operations on the last business day of the previous month in question – jointly for the economic group where applicable, taking into account the criterion established by the authority applying Law 24.467 (and its amendments) –.

Version: 3rd. COMMUNICATION “A” 6586
Effective date:
13/10/2018
Page 3

B.C.R.A.
ORIGIN OF THE PROVISIONS CONTAINED IN THE RULES ON “LIQUIDITY COVERAGE RATIO”