Resolution CMN No. 1099 - Capital Market - Credit Operations. Guarantee System to Cover Obligations Incurred by Financial Institutions and Leasing Companies Creation of Insurance Against the Risk of Intervention, Extrajudicial Liquidation or Bankruptcy

RESOLUTION NO. 001099

THE CENTRAL BANK OF BRAZIL, pursuant to Article 9 of Law No. 4,595, of December 31, 1964, makes public that the MONETARY NATIONAL COUNCIL, in a session held on February 28, 1986, and in accordance with the provisions of Articles 4 (items VI, VIII, XI, XVII, XIX) and 30 of the aforementioned Law, and Article 12 of Law No. 5,143, of October 20, 1966, as amended by Decree-Law No. 1,342, of August 28, 1974,

HAS RESOLVED:

I - To authorize the Central Bank of Brazil to perform the following acts, with a view to establishing a credit guarantee against financial institutions and leasing companies:

a) to enter into a contract with a non-profit legal entity, to be constituted by private and non-federal public financial institutions and leasing companies, with the purpose of providing guarantees for the credit liabilities of its affiliated entities, under the terms, limits, and conditions to be stipulated in said contract;

b) to allocate to the legal entity referred to in item "a" the resources necessary for the payment of guaranteed credits, in cases of intervention, extrajudicial liquidation, or bankruptcy, provided that the resources of said legal entity are insufficient, being able to:

1. employ, including in the form of advances, resources from the monetary reserve, up to the limits thereof, for payments of guaranteed credits, establishing the monetary correction rates and interest applicable in the case of advances, observing the prescriptions of Article 12 of Law No. 5,143, as amended by Decree-Law No. 1,342/74;

1.1. in the case of advances of resources from the monetary reserve, the establishment of the return scheme for the resources will respect, as a ceiling for each installment of return, including interest and monetary correction, the value of the contributions that the affiliated institutions of the legal entity referred to in item "a" must make to it, to finance the guarantee;

2. provide assistance to financial institutions, affiliated entities of the legal entity referred to in item "a", in the form of loans, providing resources intended to reinforce their equity, if there are no resources from the monetary reserve, observing the following conditions, to be defined by the Central Bank:

a - limit; b - term; c - guarantee; d - costs;

c) to acquire federal public bonds owned by the legal entity referred to in item "a", in order to ensure liquidity for its technical provisions and reserves, for the purpose of settling the guaranteed credits;

d) to admit that financial institutions present a temporary excess in immobilization indices resulting from their participation in the equity of the legal entity referred to in item "a".

II - To authorize the Central Bank of Brazil to allocate resources from the monetary reserve for the payment of demand deposits in financial institutions subject to intervention, extrajudicial liquidation, or whose bankruptcy has been declared.

III - The Central Bank may adopt measures deemed necessary for the execution of this Resolution.

IV - This Resolution shall enter into force on the date of its publication.

Brasília-DF, February 28, 1986

Fernão Carlos Botelho Bracher
President