Minimum Cash Requirements: Adjustments

2020 - YEAR OF GENERAL MANUEL BELGRANO

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION “A” 6858
09/01/2020

TO FINANCIAL INSTITUTIONS:
Ref.: Circular
REMON 1 - 989

Minimum cash. Adjustments.

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

“1. Incorporate, with effect from 1.2.2020, into the rules on “Minimum cash” the following:

“1.5.4. Special for entities included in Group “A”, in accordance with the provisions of Section 4. of the rules on “Authorities of financial entities” and the branches or subsidiaries of foreign banks qualified as systemically important (G-SIB) not included in that group.

The requirement shall be reduced by an amount equivalent to 30 % of the sum of peso financing to MSMEs –in accordance with the definition contained in the rules on “Determination of the condition of micro, small or medium enterprise”– granted at a maximum fixed nominal annual interest rate of 40 %.

For this purpose, the average monthly balance of the covered financing of the period prior to the computation of the requirement that meet the indicated conditions shall be considered.

This deduction may not exceed 2 % of the peso items subject to requirement, on average, of the month prior to the computation.”

2. Incorporate, with effect from 1.2.2020, as the last paragraph of point 1.5. of the rules on “Minimum cash” the following:

“ The financing computed for the deduction of point 1.5.4. may not be considered for the determination of the deduction of point 1.5.1.”

On the other hand, we send you the pages that, in replacement of those previously provided, should be incorporated into the reference rules. In this regard, it is recalled that on the page of this Institution www.bcra.gob.ar, by 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

Enrique C. Martin
Deputy Manager of Issuance of Rules

María D. Bossio
Deputy General Manager of
Financial Regulation a/c

ANNEX

1.5.3. Based on cash withdrawals made through the entity's automated teller machines.

The requirement shall be reduced by the amount resulting from the following expression, without being able to exceed the amount of the requirement previously determined, considering the provisions of the preceding point:

where:

Msi : monthly average of the total daily cash withdrawals from automated teller machines, corresponding to the previous month, located in the entity's operating offices, according to the jurisdiction in which it is located, in accordance with the provisions of the rules on “Categorization of localities for financial entities”.

Mni : monthly average of the total daily cash withdrawals from automated teller machines, corresponding to the previous month, outside its operating offices (neutral) and according to the jurisdiction in which they are located, in accordance with the aforementioned categories.

Psi : weighting applicable to the amount Msi .

Pni : weighting applicable to the amount Mni .

Weightings applicable based on the categories in which the automated teller machines are located
i	Psi	Pni
1 (categories I and II)	0,95	1,65
2 (categories III and IV)	4,25	7,05
3 (categories V and VI)	7,50	14,80

For these purposes, those automated teller machines that –at a minimum– allow users to make cash withdrawals regardless of the entity of which they are clients and of the network administering those equipment and that –on a monthly average, counting business and non-business days– have remained accessible to the public for at least ten hours per day shall be counted.

1.5.4. Special for entities included in Group “A”, in accordance with the provisions of Section 4. of the rules on “Authorities of financial entities” and the branches or subsidiaries of foreign banks qualified as systemically important (G-SIB) not included in that group.

The requirement shall be reduced by an amount equivalent to 30 % of the sum of peso financing to MSMEs –in accordance with the definition contained in the rules on “Determination of the condition of micro, small or medium enterprise”– granted at a maximum fixed nominal annual interest rate of 40 %.

Version: 8th COMMUNICATION “A” 6858
Effective:
01/02/2020
Page 12

For this purpose, the average monthly balance of the covered financing of the period prior to the computation of the requirement that meet the indicated conditions shall be considered.

This deduction may not exceed 2 % of the peso items subject to requirement, on average, of the month prior to the computation.

The financing computed for the deduction of point 1.5.4. may not be considered for the determination of the deduction of point 1.5.1.

1.6. One-off increases in the requirement due to concentration of liabilities.

When an excessive concentration of liabilities is verified (in holders and/or terms), which implies a significant risk with respect to the individual liquidity of the financial institution and/or has a significant negative effect on systemic liquidity, additional minimum cash reserves may be set on the included liabilities of the financial institution and/or those complementary measures deemed pertinent.

This situation shall be considered to be configured when, among others, any of the following factors is present:

• A high percentage of liabilities is concentrated in a single holder or holders.

• In term obligations, the term is short.

• The aforementioned liabilities represent a significant percentage with respect to the integration of the minimum cash reserve and/or the total private-sector deposits in the institution.

1.7. Transfers.

1.7.1. Admitted margin.

The integration of the minimum cash reserve of the average position for the period may not be less than 80% of the requirement resulting from the following expression:

EEMA (n) = EEF (n) + ENI (n-1)

Where

EEMA (n): adjusted minimum cash reserve requirement corresponding to period “n”.

EEF (n): minimum cash reserve requirement according to current regulations corresponding to period “n”.

ENI (n-1): requirement not integrated in period “n-1”.

Period: month or two-month period, as applicable.

Version: 4th. COMMUNICATION “A” 6858
Effective date:
01/02/2020
Page 13

1.7.2. Utilization period.

The admitted transfer of the requirement not integrated in each period to the following position may be made up to a maximum of six periods, counted from the first –inclusive– in which the option for its utilization is made in accordance with the provisions above or from the first position immediately following that in which the transferred deficits are offset or a charge is paid on them.

For its calculation, the numerals transferred from the period to which they correspond shall be computed, divided by the number of days of the period to which the transfer is made.

1.7.3. Optional treatment for two-month periods.

Option may be made to integrate in the months of July and December of each year the transfers of the requirement not integrated in pesos from the previous month, maintaining the computation method in force for the requirement of each two-month period.

For this purpose, those responsible for managing the liquidity policy of the institution must inform the Superintendency of Financial and Exchange Institutions (SEFyC) that they have exercised that option.

1.8. Deficit in the application of resources in foreign currency.

The deficit in the application of resources corresponding to deposits in foreign currency, net of cash balances in the institutions, in custody in other financial institutions, in transit and in Securities Transporters (TV), determined in a month shall be computed for an equivalent amount in the calculation of the minimum cash reserve requirement for that same period of the respective currency.

1.9. Increase in the requirement for noncompliance with the rules on “Line of credit for productive investment”.

The deficit in the application of Cupo 2013 verified –as of 1.7.13 or 1.1.14, as the case may be, when it is the first tranche and 1.1.14 or 1.7.14, as the case may be, when it is the second tranche– shall be computed for an equivalent amount in the calculation of the minimum cash reserve requirement on average in pesos, from those dates and for 24 months.

The deficit in the application of Cupo 2014 verified –as of 1.7.14 or 1.1.15, as the case may be, when it is the first tranche and as of 1.1.15 or 1.7.15, as the case may be, when it is the second tranche– shall be computed for an equivalent amount in the calculation of the minimum cash reserve requirement on average in pesos, from those dates and for 24 months.

Noncompliance with the provisions of the second paragraph of point 3.5.3.2. of the rules on “Line of credit for productive investment” (register as of 30.9.14 agreements for at least 50% of the total amount of the second tranche of Cupo 2014 and at least 50% to MSMEs) shall generate an increase in the minimum cash reserve requirement on average in pesos for an equivalent amount from the day following its verification (1.10.14) for 3 months.

Version: 4th. COMMUNICATION “A” 6858
Effective date:
01/02/2020
Page 14

CENTRAL BANK OF THE ARGENTINE REPUBLIC

MINIMUM CASH RESERVE B.C.R.A.
Section 1. Requirement.

Noncompliance with the provisions of the third paragraph of point 3.5.4.1. of the rules on “Line of credit for productive investment” (register as of 31.3.15 agreements for at least 30% of the total amount of the first tranche of Cupo 2015) shall generate an increase in the minimum cash reserve requirement on average in pesos for an equivalent amount from the day following its verification (1.4.15) for 3 months.

Noncompliance with the provisions of the third paragraph of point 3.5.4.2. of the rules on “Line of credit for productive investment” (register as of 30.9.15 agreements for at least 30% of the total amount of the second tranche of Cupo 2015) shall generate an increase in the minimum cash reserve requirement on average in pesos for an equivalent amount from the day following its verification (1.10.15) for 3 months.

The deficit in the application of the second tranche of Cupo 2015 verified –as of 1.4.16 or 1.7.16, as the case may be–, shall be computed for an equivalent amount in the calculation of the minimum cash reserve requirement on average in pesos, from those dates and for 24 months.

This, without prejudice to the provisions of point 8.3. of the rules on “Line of credit for productive investment”.

Version: 1st. COMMUNICATION “A” 6858
Effective date:
01/02/2020
Page 15

MINIMUM CASH RESERVE

								OBSERVATIONS
CONSOLIDATED TEXT			SOURCE RULE
Sec.	Point	Paragraph	Com.	Annex	Sec.	Point	Para.
1.	1.3.8.		"A" 4360			2.		According to Com. "A" 5356 and 6616.
	1.3.9.		"A" 4754			6.		According to Com. "A" 5356, 5980, 6195, 6526, 6532, 6616 and 6728.
	1.3.10.		"A" 5945			4.		According to Com. "A" 6069, 6204 and 6616.
	1.3.11.		"A" 6341					According to Com. "A" 6616.
	1.3.12.		"A" 6069			4.		According to Com. "A" 6616.
	1.3.13.		"A" 5356			1.		According to Com. "A" 6616 and 6706.
	1.3.14.		"A" 6526					According to Com. "A" 6532, 6550, 6587, 6616 and 6706.
	1.3.15.		"A" 6550					According to Com. "A" 6556, 6559, 6575, 6587, 6616, 6706, 6738, 6740 and 6817.
	1.3.	Last	"A" 6526					According to Com. "A" 6532, 6556, 6569, 6575, 6587, 6616, 6628 and 6740.
	1.4.		"A" 3905			3.		According to Com. "A" 4179, 4449, 4473, 5671, 5740, 6232, 6349 and 6719. Includes interpretive clarification.
	1.5.		"A" 5356			2.		According to Com. "A" 5471.
	1.5.1.		"A" 5356			2.		According to Com. "A" 5471, 5623, 6531, 6703 and 6705.
	1.5.2.		"A" 5631			1.		According to Com. "A" 5638, 6217, 6531 and 6857.
	1.5.3.		"A" 6740			1.
	1.5.4.		"A" 6858			1.
	1.5.	Last	"A" 6858			2.
	1.6.		"A" 3274	II	1.	1.5.		According to Com. "A" 3498.
	1.7.		"A" 3274	II	1.	1.6.
	1.7.1.		"A" 3274	II	1.	1.6.1.		According to Com. "A" 4405, 4449, 6349 and 6719.
	1.7.2.		"A" 3274	II	1.	1.6.2.		According to Com. "A" 3304, 4449, 6349 and 6719.
	1.7.3.		"A" 6728			2.
	1.8.		"A" 3498	sole	1.	1.8.		According to Com. "A" 4147 and 6537.
	1.9.		"A" 5380					According to Com. "A" 5449, 5516, 5600, 5654 and 5771. Includes interpretive clarification.
2.	2.1.		"A" 3274	II	2.	2.1.		According to Com. "A" 3498, 3597, 4716, 4815, 6288, 6763 and "B" 9186.