Normative Instruction BCB No. 612 — Amends Normative Instruction BCB No. 385 of May 30, 2023

NORMATIVE INSTRUCTION BCB NO. 612, OF April 25, 2025

Amends Normative Instruction BCB No. 385, of May 30, 2023.

The Head of the Prudential and Exchange Regulation Department (Dereg), using the powers conferred upon him by Art. 23, item I, letter "a", and Art. 119, item I, letter "d", of the Internal Regulations of the Central Bank of Brazil, annexed to Resolution BCB No. 340, of September 21, 2023, and having regard to the provisions of Art. 56 of Resolution No. 4.557, of February 23, 2017, Art. 23, § 5th, of Resolution BCB No. 54, of December 16, 2020, and Art. 63 of Resolution BCB No. 265, of November 25, 2022,

R E S O L V E:

Art. 1st
Normative Instruction BCB No. 385, of May 30, 2023, shall enter into force with the following alterations:

"Art. 1st-F
Modifications have been made to the following tables:

I - Table KM1: inclusion of lines to highlight regulatory capital values, their proportion relative to risk-weighted assets (RWA), and the Leverage Ratio, aiming to allow comparison between values without considering the impacts of the transition rule in the respective requests due to the introduction of the new provisioning model based on expected losses;

II - Tables LR1 and LR2: alteration of the filling instructions to include the transition rule regarding the new provisioning model based on expected losses in the value of the Leverage Ratio;

III - Table CR2 with alteration in the definition of 'operations not accounted for in the balance sheet'; and

IV - Table CR5 with alterations in the 'Exposures guaranteed by real estate' table and the respective filling instruction." (NR)

Art. 2nd
This Normative Instruction enters into force on April 28, 2025.

RICARDO FRANCO MOURA

INFORMATION NOTE, APRIL 25, 2025

Regulation Matters – Amends Normative Instruction BCB No. 385, of May 30, 2023.

1. Resolution CMN No. 4.966, of November 25, 2021, established important alterations in the concepts and accounting criteria(1) to be observed by financial institutions and other institutions authorized to operate by the Central Bank of Brazil (BCB) for the constitution of provisions for expected losses associated with the credit risk of financial instruments. Due to the migration to the new provisioning model, an abrupt increase in provisioning expenses may affect the calculation of the accounting equity of institutions and, consequently, regulatory capital and solvency metrics.

2. Given the potential impacts, the Basel Committee on Banking Supervision (BCBS) granted jurisdictions the discretion to establish a transition schedule to smooth the effects of adopting such standards on regulatory capital(2). Evaluating the expected effects of implementing the new accounting standard in the Country, the National Monetary Council, through Resolution CMN No. 5.199, and the Central Bank of Brazil, through Resolution BCB No. 448, both dated December 23, 2024, established a transition schedule to smooth the impacts on regulatory capital.

3. As foreseen by the BCBS, jurisdictions opting for the transition rule must provide transparency, in the Pillar 3 Report, on the impacts of the full implementation of the new accounting framework. Thus, it is necessary to adjust Table KM1, so as to require the disclosure of regulatory capital values, their proportion relative to risk-weighted assets (RWA), and the leverage ratio had the transition rule not been adopted. To provide greater clarity to the additional disclosed values, lines were also included regarding RWA and Total Exposure, the excess of resources applied in permanent assets, and the excess margin of Core Capital, in all cases considering capital values without the transition impacts. It is also necessary to make specific adjustments to tables LR1 and LR2 so that the value of the Leverage Ratio is disclosed in accordance with the currently effective transition rule. The proposed adjustments will impact Pillar 3 with a reference date of June 30, 2025, when the three mentioned tables are published.

4. Additionally, adjustments are made to two credit risk tables, resulting from questions from regulated institutions, which in preparing their reports had doubts about filling in certain information. In Table CR2, the definition of 'off-balance sheet exposures' in the filling instruction was adjusted, which was not aligned with the concept established in Resolution BCB No. 229, of May 12, 2022. In Table CR5, Table 9 – 'Exposures guaranteed by real estate' was improved with adjustments to the risk weighting factors linked to line V.a and the respective filling instruction, to clarify that exposures where the dedicated property unit institute is adopted or related to sold real estate units should be reported in the line where there is no dependence on the cash flow generated by the property, according to its nature, whether residential or non-residential.

5. In compliance with the provisions of Art. 5th of Law No. 13.874, of September 20, 2019, Decree No. 10.411, of 2020, determines that proposals for normative acts of general interest for economic agents formulated by bodies and entities of the direct, autarchic, and foundation federal public administration, as well as by collegiate bodies through the body or entity responsible for providing administrative support, must be preceded by a regulatory impact analysis (RIA).

6. However, according to Art. 4th, items II and VI, of the aforementioned Decree, the preparation of an RIA may be waived in the issuance of a normative act resulting from a process of convergence to international standards or that aims to discipline rights or obligations defined in a hierarchically superior norm that does not allow, technically or legally, different regulatory alternatives. In light of these provisions, the issuance of the proposed normative instruction is exempt from the preparation of an RIA.

Ricardo Franco Moura
Head of the Prudential and Exchange Regulation Department

(1) Based on the standards established according to the International Financial Reporting Standard 9 – Financial Instruments (IFRS9), the new accounting rules expand the list of financial instruments subject to provisioning, now based on expected losses.

(2) The international recommendations on the transition of the effects of provisioning based on expected losses on regulatory capital can be found in the transition rules contained in the chapter on Capital Definition of the Basel Agreement. Available at https://www.bis.org/basel_framework/chapter/CAP/90.htm.