RESOLUTION BCB No. 332, OF JUNE 29, 2023

Amends Resolution BCB No. 265, of November 25, 2022, which provides for the risk‑management structure, capital‑management structure and information‑disclosure policy of prudential conglomerates classified as Type 3 within Segment 2 (S2), Segment 3 (S3) or Segment 4 (S4), and Resolution BCB No. 201, of March 11, 2022, which provides for the optional simplified methodology for determining the minimum requirement of Simplified Reference Capital (PRS5) for prudential conglomerates classified as Type 3, regarding the requirements for opting for this methodology and the simplified continuous risk‑management structure.

The Collegiate Board of the Central Bank of Brazil, in a session held on June 22, 2023, based on arts. 9, paragraph II, and 15 of Law No. 12,865, of October 9, 2013, and taking into account the provisions of arts. 10 and 14 of Resolution No. 4,282, of November 4, 2013,

RESOLVE:

Art. 1 The Resolution BCB No. 265, of November 25, 2022, shall henceforth apply with the following amendments:

Art.
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IX

• country risk and transfer risk, as defined in art. 46‑A, to which the institution is significantly exposed; and

X

• other relevant risks, according to criteria defined by the institution, including those not covered in the calculation of the amount of risk‑weighted assets (RWA).

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(NR)

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II

• restructuring of financial instruments: renegotiation under the terms of art. 2, paragraph XXI, of Resolution BCB No. 219, of March 30, 2022.

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(NR)

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IV

• the credit‑recovery expectation, including granting of advantages, execution costs and terms; and

V

• the impacts of country risk and transfer risk, as addressed in art. 46‑A, on the probability mentioned in paragraph III and on the credit‑recovery expectation mentioned in paragraph IV.

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(NR)

Art. 22 For the purposes of credit‑risk management, the characterization and decharacterization of exposure as a problem asset must occur pursuant to art. 3 of Resolution BCB No. 219, of 2022. (NR)

Section IX
On the Management of Country Risk and Transfer Risk

Art. 46‑A For the purposes of this Resolution, it is defined:

I

• country risk as the possibility of losses associated with events related to a foreign jurisdiction, including also:
  a) sovereign risk, in the case of exposure assumed before the central government of a foreign jurisdiction; and
  b) indirect country risk, in the case of an event related to a foreign jurisdiction different from that where the counterparty or the issuer of a risk‑mitigating instrument associated with the exposure assumed by the institution is located, when the counterparty or issuer could be significantly impacted by the respective event; and
  II
• transfer risk as the possibility of obstacles in the foreign‑exchange conversion of resources necessary for the settlement of an obligation to the institution, in the case where those resources are located in a jurisdiction different from that where the respective settlement will be performed.

Sole paragraph. For the purposes of the provision in the head, paragraph I, sub‑letter “b”, the definition of counterparty established in art. 19, § 1, paragraph I, applies.

Art. 46‑B The management structure referred to in art. 5 must additionally provide, for country risk and transfer risk:

I

• mechanisms for managing country risk and transfer risk by counterparty, by jurisdiction and, where common relevant risk factors exist, by a set of jurisdictions, defined based on clear and verifiable criteria;
  II
• processes for timely identification of political, legal, regulatory, market changes, among others, that may significantly impact the country risk and transfer risk incurred by the institution, as well as procedures for mitigating those impacts;
  III
• recording of relevant data for the management of country risk and transfer risk, including, when available, data concerning the respective losses incurred by the institution; and
  IV
• monitoring of significant concentrations of exposure to country risk and transfer risk.

§ 1 The management referred to in the head must also consider, when relevant, interdependent operations and operations carried out between institutions that are part of the same prudential conglomerate.

§ 2 The management reports referred to in art. 5, paragraph X, must additionally, for country risk and transfer risk, address the reporting of relevant exposures, grouped, as appropriate, by jurisdiction and, where common relevant risk factors exist, by a set of jurisdictions. (NR)

Art. 2 The Resolution BCB No. 201, of March 11, 2022, shall henceforth apply with the following amendments:

Art.
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II

• restructuring of financial instruments: renegotiation under the terms of art. 2, paragraph XXI, of Resolution BCB No. 219, of March 30, 2022.

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(NR)

Art. 30 For the purposes of credit‑risk management, the characterization and decharacterization of exposure as a problem asset must occur pursuant to art. 3 of Resolution BCB No. 219, of 2022. (NR)

Art. 3 The following are revoked:

I – § 2 and items II and III of § 3 of art. 19, item I of § 3 of art. 21 and items I and II and §§ 1, 2 and 3 of art. 22 of Resolution BCB No. 265, of 2022; and
II – § 2 of art. 28 and items I and II and §§ 1, 2 and 3 of art. 30 of Resolution BCB No. 201, of 2022.

Art. 4 This Resolution enters into force:

I – on January 1, 2024, with respect to the following provisions relating to Resolution BCB No. 265, of 2022:

a) amendments to art. 4;

b) inclusion of Section IX and arts. 46‑A and 46‑B, which compose it; and

c) revocation of items II and III of § 3 of art. 19 and item I of § 3 of art. 21; and

II – on January 1, 2025, with respect to the remaining provisions.

Roberto de Oliveira Campos Neto
President of the Central Bank of Brazil