Recopilación de Normas de Regulación y Control del Sistema Financiero - Adjustment of regulations on credit risk limits

1
Montevideo, August 21, 2025
Ref: RECOLLECTION OF REGULATORY AND CONTROL NORMS OF THE FINANCIAL SYSTEM - Adjustment of regulations on credit risk limits.
The market is informed that the Superintendence of Financial Services adopted resolution SSF No. 2025-402 on August 19, 2025.

JUAN PEDRO CANTERA
Superintendent of Financial Services
2025-50-1-01375
Diagonal Fabini 777 - C.P. 11100 - Tel.: (598 2) 1967 - Montevideo, Uruguay - www.bcu.gub.uy

CIRCULAR No. 2485

SUPERINTENDENCE OF FINANCIAL SERVICES – RESOLUTION SUPERINTENDENCE OF FINANCIAL SERVICES

VIEWING: The regulations on credit risk limits established in Articles 204 to 218 of the Recollection of Regulatory and Control Norms of the Financial System.

RESULTING:
I) That, within the framework of the tasks defined in the 2025 Regulatory Plan, a project was drafted with the objective of adjusting the regulations regarding credit risk limits, taking into account the revisions introduced by the Basel Committee on Banking Supervision (BCBS) in 2014. II) That, for the elaboration of the proposal, a detailed analysis was made of the current regulations on credit risk limits and the international standard on the matter, in order to identify the gaps between both. III) That it is proposed to reorder the current regulations, first establishing the definitions of included risks, excluded risks, linked entities, and large exposures. Next, a single article on credit risk limits is introduced that includes the general criterion, exceptions, and aggregate limits (non-national public sector, country risk, and global limit). IV) That this project modifies the treatment of admitted guarantees for the calculation of credit risk limits, establishing that when an admissible risk mitigation technique has been applied for the capital requirement for credit risk (Article 160.1.1), the institution must reduce the value of the exposure to the initial counterparty and recognize the exposure to the guarantor or the issuer of the admitted collateral value. V) That, regarding contingent risks and commitments, it is established that they will be converted into credit equivalents through the use of credit conversion factors as provided in Article 160.1, with a minimum limit of 10%. VI) That, regarding the calculation of financial derivatives, it is proposed to clarify that, in the case where a bilateral netting agreement includes contracts with different maturities with the financial sector, for the purpose of calculating the limit, the one corresponding to the operation with the longest maturity will be taken. VII) That this project incorporates values issued by the National Government and credit risks assumed by the State as a legal entity as risks excluded from the credit risk limit regulation.

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VIII) That the regulatory proposal incorporates a differential limit for banks and retail financial intermediation cooperatives when granting credits through the salary retention modality.
IX) That the proposal was submitted for consultation to supervised institutions and the general public on June 6, 2025, with the deadline for receiving comments expiring on July 18, 2025.
X) That consultations and comments were received from the Association of Private Banks of Uruguay, the Bank of the Oriental Republic of Uruguay, and Banco Bandes.
XI) That the main consultations and comments referred to the following aspects: included and excluded risks, calculation of the admissible capital base, credit risk limits with the private financial sector, credit risk limits with the non-national public sector, and credit risk limits with members of the public sector other than the State as a legal entity.

CONSIDERING:
I) That the comments received from the industry provided elements that allowed improving the original proposal, corroborating the value that the consultation process has for the regulator, motivating the following modifications:

• The currently valid criterion is maintained by which credit risks assumed with financial institutions rated in a category not lower than BBB+ or equivalent can be up to 25% of the admissible capital base. If it were an economic group in which at least one member is rated in a category not lower than BBB+ or equivalent, the limit for said group will be up to 25%, respecting the individual limits for each institution that forms part of it.
• It is clarified that institutions may assume credit risks with each of the members of the public sector that do not form part of the State considered as a legal entity up to 20% of their admissible capital base.
  II) That it is understood to be convenient to incorporate an information requirement regarding the quarterly declaration of compliance with risk limits, for which a period of 15 business days following the reported period will be granted.

ATTENTIVE: To what is provided in letter A) of Article 38 of Law No. 16.696 of March 30, 1995, in the wording given by Article 2 of Law No. 20.345 of September 19, 2024, and to the reports issued by this Superintendence of Financial Services.

IT IS RESOLVED:

1. INCORPORATE Section I - Limits on management immobilizations, placement of assets in the country, foreign currency position, position of active and passive operations with terms greater than three years, and limit on temporary overdrafts in Chapter I - Technical relations for banks, financial houses, and financial intermediation cooperatives, of Title V – Technical Relations, of Book II – Stability and Solvency of the Recollection of Regulatory and Control Norms of the Financial System, which will contain Articles 198 to 204.
2. SUBSTITUTE in Section I - Limits on management immobilizations, placement of assets in the country, foreign currency position, position of active and passive operations with terms greater than three years, and limit on temporary overdrafts of Chapter I - Technical relations for banks, financial houses, and financial intermediation cooperatives, of Title V – Technical Relations, of Book II – Stability and Solvency of the Recollection of Regulatory and Control Norms of the Financial System, Articles 198 and 204 with the following:

ARTICLE 198 (LIMIT ON MANAGEMENT IMMOBILIZATIONS).
The amount of management immobilizations of banks, financial houses, and financial intermediation cooperatives shall not exceed 100% of the accounting equity.
The following items arising from the individual balance sheet prepared in accordance with Article 507 are considered management immobilizations:

• The balance - net of provisions - of overdue credits with more than two years past due.
• Non-current assets held for sale.
• Participations in subsidiaries.
• Investments in shares acquired with the objective of accessing services necessary to carry out the operations that the institution is authorized to perform habitually.
• Property, plant, and equipment.
• Right-of-use assets.
  For the purpose of determining the amount of management immobilizations, items in foreign currency shall be calculated, up to the penultimate day of the month, at the exchange rate and arbitrage rates of the last day of the previous month.

ARTICLE 204 (LIMIT ON TEMPORARY OVERDRAFTS).
Temporary overdrafts in current accounts originated in payment orders issued by the customer via checks, as established in letter a. of Article 397, shall not exceed 0.5 per mille of the basic patrimonial liability for banks or 25% of the authorized credit to the respective account holder to draw in overdraft, nor may they be granted for a period greater than ten business days. Temporary overdrafts in current accounts originated in concepts different from those established in the preceding paragraph must be cancelled within a period that shall not exceed thirty days. Those overdrafts that exceed the maximum amount provided for payment orders issued via checks must be based on prior client analysis and require having all the information required by Article 269. These overdrafts may only benefit credit risks categorized as "Debtors with strong payment capacity", "Debtors with adequate payment capacity", and "Debtors with potential payment problems".

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3. INCORPORATE Section II – Credit Risk Limits in Chapter I - Technical relations for banks, financial houses, and financial intermediation cooperatives, of Title V – Technical Relations, of Book II – Stability and Solvency of the Recollection of Regulatory and Control Norms of the Financial System, which will contain Articles 205 to 218.
4. SUBSTITUTE in Section II – Credit Risk Limits of Chapter I - Technical relations for banks, financial houses, and financial intermediation cooperatives, of Title V – Technical Relations, of Book II – Stability and Solvency of the Recollection of Regulatory and Control Norms of the Financial System, Articles 205, 206, 207, 208, 209 with the following:

ARTICLE 205 (INCLUDED RISKS).
Risks assumed with the financial, non-financial, related parties, and public sectors by placements in financial institutions, direct credits, risks and contingent commitments, and investments in securities, net of provisions for credit risks, shall be subject to the limits set forth in Article 209. Likewise, the limits with the non-national public sector, with third countries, and the global limit set forth in the aforementioned Article 209 must be considered. Risks and contingent commitments shall be converted into credit equivalents through the use of credit conversion factors (CCF) as provided in Article 160.1, with a minimum limit of 10%. The total of operations in which the client appears as debtor or co-debtor shall be included in the computable risk. When an admissible risk mitigation technique has been applied for the capital requirement for credit risk (Article 160.1.1), the institution must reduce the value of the exposure to the initial counterparty and recognize the exposure to:

• guarantors,
• issuers of securities admitted as collateral.
  To quantify the total risk to be assumed by each natural or legal person or by each economic group, all operations in national and foreign currency shall be included. Foreign currency operations shall be valued in national currency, in the manner provided in Article 514, at the exchange rate of the last day of the previous month. When the institution has fund shares in investment funds that form part of the trading portfolio according to what is established in Article 162, the assets in which said fund invests shall be treated as if they were direct exposures, provided that they are computable risks for the purpose of credit risk limits, taking into account the share that the institution holds in the total investment fund. Financial derivatives shall be computed by the credit risk equivalent according to what is established in Article 161. In the case where a bilateral netting agreement includes contracts with different maturities with the financial sector, for the purpose of calculating the limit, the one corresponding to the operation with the longest maturity shall be considered.

Institutions that must present consolidated financial statements may assume consolidated credit risks with their subsidiaries for each natural or legal person or by each economic group, according to the definition given by Article 271, in accordance with the limits established for each type of exposure. For the purpose of considering risk ratings referred to the credit risk limit, the criteria set forth in Article 160.1 shall apply.

ARTICLE 206 (EXCLUDED RISKS).
The following are excluded from the credit risk limit regulation:

1. Risks with the Central Bank of Uruguay, values issued by the National Government, credit risks assumed by the State as a legal entity, and with educational entities.
   Credit risks with the State as a legal entity are considered to be the sum of those assumed with the Executive, Legislative, and Judicial Powers, the Ministries, the Electoral Court, the Court of Accounts, and the Contentious-Administrative Court. Similar concepts shall be used to consider the non-national public sector, regardless of the name adopted in each country to designate the members of said sector.
2. Active items with the head office and its dependencies abroad originated in fund movements, excluding operations with automatic reimbursement corresponding to the discount of derivative instruments of commercial operations issued or guaranteed by institutions authorized to operate through the reciprocal payments and credits agreements signed by the Central Banks of the member countries of ALADI, the Dominican Republic, and Cuba.
3. Credits for the part guaranteed by deposits in money pledged expressly and irrevocably in the own financial intermediary institution and provided that the credit was granted in the same currency, except in the cases of deposits denominated in currencies of countries with a rating equal to or higher than AA or in Euros.
4. Irrevocable documentary credits or bills of exchange that secure loans for export financing whose shipments or services have already been fulfilled and have a reimbursement code duly verified through the reciprocal payments and credits agreements signed by the Central Banks of the member countries of ALADI, the Dominican Republic, and Cuba.
5. Irrevocable documentary credits corresponding to exports whose shipments or services have already been fulfilled, issued or confirmed by foreign banks rated in a category not lower than BBB+ or equivalent.
6. Bills of exchange corresponding to exports whose shipments or services have already been fulfilled, guaranteed by foreign banks rated in a category not lower than BBB+ or equivalent.

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7. Guarantees in favor of international transport companies related to the legitimate ownership of imported merchandise under an irrevocable documentary credit or a guaranteed collection.

ARTICLE 207 (DEFINITION OF LINKAGE).
A single risk shall be considered as the sum of those assumed with:
a) senior management referred to in Article 261 and natural and legal persons linked to them, considered jointly and provided that they are not risks excluded by the prohibition of Article 257, b) the head office and its dependencies (except in the case of items originated in fund movements) or shareholders whose individual participation exceeds 10% of the integrated capital of the financial intermediary institution, as applicable, and natural or legal persons that form an economic group with them, c) natural and legal persons linked to the aforementioned shareholders. Risks assumed by operations and under the conditions detailed below shall not be treated as a single risk, and limits may be applied independently for each linked financial institution:

• Confirmations or non-recourse purchases of irrevocable documentary credits and guaranteed bills of exchange corresponding to exports whose shipments or services have already been fulfilled, which have a reimbursement code duly verified through the reciprocal payments and credits agreements signed by the Central Banks of the ALADI member countries, the Dominican Republic, and Cuba.
• Confirmations or non-recourse purchases of irrevocable documentary credits and guaranteed bills of exchange by banks rated in a category not lower than BBB+ or equivalent, corresponding to exports whose shipments or services have already been fulfilled.
• Guarantees issued by foreign banks, including the head office and its dependencies, or by multilateral development banks, rated in a category not lower than BBB+ or equivalent.
  For the purpose of determining the situations in which the linkage referred to in letters a) and c) above is configured, it must be considered that there is a relevant linkage of senior management and shareholders of the financial intermediary company with natural or legal persons when:
  a) In the case of natural persons:
  There is a family relationship by being the spouse or concubine, children, or children of the spouse or concubine. b) In the case of legal persons:
  i) They hold a participation greater than 10% of the capital or hold positions with authority and responsibility in planning, direction, and control activities. ii) Their spouses or concubines, children, or children of the spouse or concubine hold a participation greater than 10% of the capital or hold positions with authority and responsibility in planning, direction, and control activities. Positions with authority and responsibility in planning, direction, and control activities are those referred to in Article 261. When the natural persons intervening in the linkage hold positions under the preceding terms in institutions regulated and supervised by the Central Bank of Uruguay, the Superintendence of Financial Services may expressly declare that no relevant linkage is configured based on objective valuation criteria that allow establishing that there is no situation susceptible of affecting the independence in the appreciation of risks in credit operations.

ARTICLE 208 (DEFINITION OF LARGE EXPOSURE).
Risks assumed by an institution with a natural or legal person or with a group of natural or legal persons linked to each other shall be considered a "large exposure" when its value is equal to or greater than 10% of its admissible capital base defined in Article 209.

ARTICLE 209 (CREDIT RISK LIMIT).
Institutions may assume for each natural or legal person or by each economic group, according to the definition given by Article 271, credit risks up to 20% of their admissible capital base.
This base corresponds to the core net equity defined in Article 154 that meets the eligibility conditions set forth in items 1) and 2) of Article 154.2 as of the last day of the immediately preceding month.
The following are exempt from the application of the aforementioned limit:

• Risks assumed with the World Bank Group (International Bank for Reconstruction and Development, International Finance Corporation, Multilateral Investment Guarantee Agency, and International Development Association), Asian Development Bank, African Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, European Investment Bank, European Investment Fund, Nordic Investment Bank, Caribbean Development Bank, Islamic Development Bank, Council of Europe Development Bank, International Finance Facility for Immunization, Asian Infrastructure Investment Bank, which may be up to 100% of the admissible capital base.
• Credit risks assumed with financial institutions rated in a category not lower than BBB+ or equivalent, which may be up to 25% of the admissible capital base. If it were an economic group in which at least one member is rated in a category not lower than BBB+ or equivalent, the limit for said group

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will be up to 25%, respecting individual limits for each institution comprising the same.

• Credit risks from operations with the non-resident financial sector (including related parties) for terms not exceeding 30 days shall be subject to the following limits:
  o institutions rated in categories A-, A, and A+ or equivalent, up to 35% of the eligible capital base. o institutions rated in categories AA-, AA, AA+, and AAA or equivalent, up to 50% of said capital base.
  If the economic group is composed of institutions with different ratings, the institution with the best rating will determine the cap applicable to the sum of credit risks for terms not exceeding 30 days assumed with said group, and access to this limit is only permitted for the sum of risks assumed with institutions that hold such rating. Furthermore, individual limits must be respected for each institution comprising the group based on its risk rating. Likewise, the following limits must be respected:

1. NON-NATIONAL PUBLIC SECTOR
   Institutions may assume credit risks with foreign states, considered as legal entities, according to the following limits:
   a) countries rated in a category equal to or higher than BBB- but lower than A- or equivalent: up to 25% of their eligible capital base. b) countries rated in a category equal to or higher than A- but lower than AA-: up to 75% of their eligible capital base. c) countries rated in a category equal to or higher than AA-: up to 7.5 times said eligible capital base.
2. COUNTRY RISK
   Institutions may make investments and placements, grant direct credits, and assume risks and contingent commitments in third countries according to the following limits per country:
   a) in countries rated in a category lower than BBB- or equivalent: up to one time their eligible capital base. b) in countries rated in a category equal to or higher than BBB- but lower than A- or equivalent: up to two times their eligible capital base. c) in countries rated in a category equal to or higher than A- but lower than AA-: up to four times their eligible capital base. d) in countries rated in a category equal to or higher than AA-: up to 10 times said eligible capital base. Debtors domiciled or securities issued abroad, and guarantees whose liquidation is subject to a return from abroad, must be included. Operations corresponding to exports whose shipments or services have already been fulfilled and credit operations guaranteed by legal entities or assets located in Uruguay when such guarantees are computable for the determination of provisions for credit risks shall be excluded. RR-SSF-2025-402 Date: 19/08/2025 16:23:17 CIRCULAR N°2485

The risk will be attributed to the country where the debtor is domiciled or from which the return of funds must be obtained, with the following exceptions:

• when the credit is granted to a branch or subsidiary abroad of a legal entity, the risk may be attributed to the country of domicile of the parent company or controlling institution, provided that it assumes without restrictions the obligations of its branch or subsidiary.
• when the credit is covered by a guarantee located in a country with lower risk than the country of the credit and it is computable for the determination of provisions for credit risks, the risk may be attributed - for the covered portion - to the country where such guarantee is located.

3. GLOBAL CAP
   The sum of risks assumed with the non-financial private sector, the private financial sector, related parties, and the public sector, with the exception of risks assumed with countries rated in a category equal to or higher than AA-, which are considered large exposures according to article 208, may not exceed at any time 8 (eight) times their eligible capital base. TRANSITIONAL PROVISION: Subordinated obligations that were authorized prior to the effective date of the Resolution communicated by Circular N° 2397 will continue to be computed for the determination of the credit risk cap, until their maturity term is completed.

5. REPEAL in Section II – Credit Risk Cap of Chapter I – Technical Relations for banks, financial houses, and financial intermediation cooperatives, of Title V – Technical Relations, of Book II – Stability and Solvency of the Compilation of Financial System Regulation and Control Norms articles 210, 210.1, 211, 212, 213, 214, 215, 216, 217, 217.1, 218, and 220.
6. SUBSTITUTE in Chapter II – Technical Relations for external financial institutions of Title V – Technical Relations, of Book II – Stability and Solvency of the Compilation of Financial System Regulation and Control Norms articles 223 and 227 with the following:
   ARTICLE 223 (CREDIT RISK CAP).
   External financial institutions shall be governed by the provisions of articles 205 to 209, with the exceptions corresponding to them based on the activity permitted to them according to what is established in article 4 of Decree-Law N° 15.322 of September 17, 1982.
   ARTICLE 227 (CAP ON TRANSITIONAL OVERDRAFTS)
   Transitional overdrafts must adhere to the provisions of article 204.
7. SUBSTITUTE in Chapter III – Technical Relations for investment banks of Title V – Technical Relations, of Book II – Stability and Solvency of the RR-SSF-2025-402 Date: 19/08/2025 16:23:17
   CIRCULAR N°2485

Compilation of Financial System Regulation and Control Norms article 233 with the following:
ARTICLE 233 (RISK CAP).
Investment banks may assume for each natural or legal person or for each economic group, according to the definition given in article 271, credit risks up to 40% of their eligible capital base, according to the definition given in article 209.
For these purposes, the concept of included risks covers those assumed by the financing or placement of securities and the financing of investment projects, as well as through loans, acceptances, sureties, guarantees, bonds, and other direct credits and risks and contingent commitments referred to in article 205.
8. SUBSTITUTE in Title VII – Prohibitions and Limitations of Book II – Stability and Solvency of the Compilation of Financial System Regulation and Control Norms article 266 with the following:
ARTICLE 266 (OPERATIONAL RESTRICTIONS FOR RETAIL BANKS AND RETAIL FINANCIAL INTERMEDIATION COOPERATIVES).
The retail banks referred to in literal b) of article 1 and the retail financial intermediation cooperatives referred to in literal g) of said article shall have their operations restricted, according to the following details:
a) they may not carry out the operations provided for in literal a) of article 17 bis of Law N° 15.322 of September 17, 1982, in the wording given by articles 2 of Law N° 16.327 of November 11, 1992, and 14 of Law N° 17.523 of August 4, 2002. They may not receive deposits from non-residents either. b) credits to the non-financial sector will be exclusively in national currency, indexed units, or other authorized indexed instruments by the Superintendence of Financial Services; c) the amounts of credits to natural or legal persons or to economic groups of the non-financial sector may not exceed 2% of their eligible capital base, according to the definition given in article 209, except when it concerns credits granted through the salary retention modality, for which a cap of 20% of said eligible capital base will apply. When an admissible risk mitigation technique has been applied for the purpose of the capital requirement for credit risk (article 160.1.1), the institution must reduce the value of the exposure vis-à-vis the initial counterparty and recognize the exposure vis-à-vis the guarantors and issuers of securities admitted as collateral. d) the amounts of credits to natural or legal persons or to economic groups of the non-financial sector exceeding 1% of their eligible capital base may not exceed collectively three times such capital base. e) they may make placements in foreign currency exclusively in those instruments provided for in article 196, as well as in local banks and financial intermediation cooperatives, in time deposits of 30 (thirty) days or more at the Central Bank of Uruguay, and in national public securities.
9. INCORPORATE in Chapter XVI – Other Information, of Title II – Information Regime, of Part I – Financial Intermediation Institutions, RR-SSF-2025-402 Date: 19/08/2025 16:23:17
CIRCULAR N°2485

of Book VI – Information and Documentation of the Compilation of Financial System Regulation and Control Norms the following article:
ARTICLE 582.10 (INFORMATION ON COMPLIANCE WITH THE CREDIT RISK CAP).
Institutions must supply quarterly information on the compliance with the credit risk cap referred to in article 209. Such information will be presented to the Superintendence of Financial Services within the first 15 (fifteen) business days following the reported period, in accordance with the instructions to be issued.
10. Validity: The provisions in numerals 1. to 9. above shall govern from July 1, 2026.
11. Communicate the provisions in numerals 1. to 10. above via Circular.
JUAN PEDRO CANTERA
Superintendent of Financial Services
RR-SSF-2025-402 Date: 19/08/2025 16:23:17
Exp. 2025-50-1-01375
Publishable: Yes - Signatory: JUAN PEDRO CANTERA SECTION CIRCULAR N°2485