Resolution CMN No. 4786 — Authorizes the Central Bank of Brazil to Grant Loan Operations Through the Special Temporary Liquidity Line

The Central Bank of Brazil, in accordance with Article 9 of Law No. 4,595 of December 31, 1964, makes public that the National Monetary Council, in an extraordinary session held on March 20, 2020, based on Article 4, item XVII, of the aforementioned Law, Article 1 of Law 11,882 of December 23, 2008, considering the provisions of Article 66-B of Law No. 4,728 of July 14, 1965, Article 68, sole paragraph, of Law No. 9,069 of June 29, 1995, and Articles 26, sole paragraph, and 28, sole paragraph, of Complementary Law No. 101 of May 4, 2000,

R E S O L V E D:

CHAPTER I

OF THE OBJECT AND SCOPE OF APPLICATION

Art. 1. This Resolution authorizes the Central Bank of Brazil to grant loan operations, under specific conditions, through the Special Temporary Liquidity Line, in national currency.

Art. 2. The loan operations referred to in this Resolution will be available until April 30, 2020, for contracting by multiple banks, commercial banks, investment banks, and savings banks holding Bank Reserve Accounts that adhere to the contractual conditions and operational procedures established by the Central Bank of Brazil for formalizing the operations and mobilizing the collateral assets.

Sole paragraph. The contracting of operations in the form of the caput is conditioned on the presentation of eligible assets, maintained in a central securities depository, which must be encumbered in favor of the Central Bank of Brazil at a time prior to contracting, for the purpose of calculating the financial limit of each operation.

Art. 3. The operations referred to in this Resolution may be contracted for a term of up to 125 (one hundred and twenty-five) business days, allowing, at the discretion of the Central Bank of Brazil, an extension of up to 125 (one hundred and twenty-five) business days, observing the maximum total term of 359 (three hundred and fifty-nine) calendar days and the other conditions established by the Autarchy.

Art. 4. The operations referred to in this Resolution are subject to the collection of daily charges corresponding to the application, on the outstanding balance, of the rate obtained by the composition of the Selic Rate, defined according to current regulation, calculated for each business day of the operation period, with an increase fixed by the Central Bank of Brazil and valid on the date of contracting the operation.

CHAPTER II

OF THE CONDITIONS FOR ACCEPTANCE OF COLLATERAL ASSETS

Art. 5. Debentures acquired in the secondary market may be accepted as collateral for the loan referred to in this Resolution that:

I - have as issuers corporations that are not financial institutions, nor companies directly or indirectly controlled by financial institutions or holding companies of financial institutions;

II - are not issued by entities that act as vehicles for the securitization of credits;

III - do not have clauses of subordination or conversion into shares;

IV - are issued in book-entry form and are deposited in a central depository authorized by the Central Bank of Brazil or by the Securities and Exchange Commission (CVM), in accordance with Law No. 12,810 of May 15, 2013;

V - present a cash flow with rules for payment of interest and amortization of low complexity, in order to allow their pricing by the Central Bank of Brazil's model;

VI - have not been acquired prior to the date of publication of this Resolution by the institution requesting the loan, nor by any entity part of the conglomerate of the institution requesting the loan.

§ 1. The Central Bank of Brazil may publish the list of assets that will be eligible for the purposes of the caput, and may adopt criteria more restrictive than those provided for in this article, including based on their risk classification.

§ 2. With regard to the set of assets offered in the form of this article, a maximum concentration index of 25% (twenty-five percent) per issuer must be observed.

§ 3. The Central Bank of Brazil will provide for the methodology for pricing the collateral assets, for the purpose of calculating the financial limit for contracting the operations referred to in this Resolution.

§ 4. The Central Bank of Brazil is authorized to provide for the eventual application of haircuts on the price of the collateral assets.

CHAPTER III

OF THE GUARANTEE BY COMPULSORY DEPOSIT AND OF THE TOTAL FINANCIAL LIMIT

Art. 6. In addition to the collateral assets referred to in Art. 5, the operations contracted within the scope of the Special Temporary Liquidity Line will also be guaranteed by compulsory deposits maintained in Bank Reserve Accounts, in an amount equivalent, at minimum, to the total of the operations.

Art. 7. The Central Bank of Brazil will define the types of compulsory deposits that may constitute collateral in accordance with Art. 6.

Sole paragraph. The Central Bank of Brazil will provide for the criterion for calculating the total financial limit of contracting, by financial institution, based on the guarantees constituted by collateral assets and compulsory deposits.

CHAPTER IV

OF THE FINANCIAL SETTLEMENT OF OPERATIONS AND OF THE FINANCIAL EVENTS OF THE GUARANTEES

Art. 8. The financial resources corresponding to the operations referred to in this Resolution will be deposited directly into the Bank Reserve Account of the contracting institution, without financial settlement in the clearing and settlement system of the central depository.

Art. 9. The resources resulting from financial events related to the collateral assets, including those corresponding to interest, amortizations, and redemptions at maturity, must be directed by the central depositories to the financial institutions that offered them.

Sole paragraph. For the purposes of the caput, financial institutions must arrange, according to the amount of the financial event received, the use of the corresponding resources for the partial or total payment of the operations referred to in this Resolution that are outstanding.

CHAPTER V

OF THE RELEASE AND RECOMPOSITION OF GUARANTEE

Art. 10. The Central Bank of Brazil must release the collateral assets, upon request of the financial institution that offered them, whenever:

I - there is no outstanding balance of operations referred to in this Resolution; or

II - the release of the collateral assets does not compromise the sufficiency of the set of assets necessary to guarantee the outstanding operations.

Art. 11. The release of resources from compulsory deposits maintained in Bank Reserve Accounts that are guaranteeing the operations referred to in this Resolution will occur in an amount equivalent to that of the release of the collateral assets referred to in Art. 10.

Sole paragraph. The release of resources referred to in the caput will be carried out ex officio by the Central Bank of Brazil:

I - when processing the release of collateral assets in the form of Art. 10; or

II - whenever it verifies the absence of an outstanding balance of operations.

Art. 12. In the event that the collateral assets are insufficient to guarantee the operations carried out, the contracting institution is obliged to recompose guarantees, through total or partial payment of contracted operations, constitution of additional guarantees, or substitution of assets.

Art. 13. In the cases of non-payment of an operation referred to in this Resolution, on its maturity date, and of non-compliance with a request for recomposition of guarantees, in the form of Art. 12, the following are prohibited:

I - the granting of new operations; and

II - the release of guarantees by the Central Bank of Brazil.

Art. 14. On the outstanding unpaid operations, contracted by a financial institution declared debtor, the charges referred to in Art. 4 will apply.

CHAPTER VI

OF DEFAULT

Art. 15. The debtor institution that does not comply with the regularization of payments, or of recomposition or substitution of guarantees, may be declared in default by the Central Bank of Brazil and, in this condition, all maturities of operations will be accelerated.

Art. 16. The declaration of default will be made by decision of the Central Bank of Brazil, and may entail, at its discretion:

I - the execution, total or partial, and alienation of the collateral assets;

II - the use of the balance of compulsory deposits that guaranteed the operations.

§ 1. In the execution and alienation of assets with collateral constituted through fiduciary cession of rights over movable property, as provided for in Article 66-B of Law No. 4,728 of July 14, 1965, the result of any surplus of guarantees will be returned to the contracting financial institution.

§ 2. The contractual instruments that will formalize the loan operations must contain a clause providing for the possibility of the Central Bank of Brazil, at its discretion, receiving the collateral assets in payment of the debt if their alienation does not materialize, without prejudice to the provisions of §4.

§ 3. The measure provided for in item II may only be applied in the event that the execution and alienation of assets with collateral are insufficient to cover the defaulted amount.

§ 4. Any negative result resulting from the alienation of assets, their appropriation in the form of §2, or the use of the compulsory balance will constitute a credit of the Central Bank of Brazil against the financial institution, to which the provisions of Article 1-A of Law No. 11,882 of December 23, 2008 will apply.

CHAPTER VII

GENERAL PROVISIONS

Art. 17. For the operations contracted within the scope of this Resolution, the tax regularity requirements provided for in Article 62 of Decree-Law No. 147 of February 3, 1967, Article 1, sole paragraph, of Decree-Law No. 1,715 of November 22, 1979, Article 27, item "b", of Law No. 8,036 of May 11, 1990, and in Law No. 10,522 of July 19, 2002, are waived for a period of one year, observing the provisions of § 3 of Article 195 of the Constitution.

Art. 18. The Central Bank of Brazil is authorized to issue complementary norms for the execution of the provisions of this Resolution.

Art. 19. This Resolution enters into force from the date of its publication.

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