Resolution modifying the General Provisions applicable to general warehouse receipts, exchange houses, credit unions, and multiple-object financial companies

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DOF: 24/07/2017

RESOLUTION modifying the General Provisions applicable to general warehouse receipts, exchange houses, credit unions, and regulated multiple-object financial companies

At the margin, a seal with the National Coat of Arms, which reads: United Mexican States.- Ministry of Finance and Public Credit.- National Banking and Securities Commission.

The National Banking and Securities Commission, based on the provisions of Articles 52, first paragraph, and 54, first paragraph, of the General Law of Organizations and Auxiliary Credit Activities; Articles 65 and 74 of the Credit Unions Law; as well as Articles 4, fractions IV, XXXVI, and XXXVIII, and 16, fraction I, of the National Banking and Securities Commission Law, and

CONSIDERING

That it is deemed convenient to adjust the accounting criteria applicable to credit unions, regarding the classification of their investments in securities held to maturity, by extending the period during which such securities may be sold or reclassified before their maturity, without affecting the ability to use said category, and

That, additionally, it is necessary to clarify the requirements for isolated events that are outside the control of credit unions, so that when they occur and credit unions sell or reclassify held-to-maturity securities, they can continue to classify them in this category, in order to achieve greater adherence and consistency with international standards established in the International Financial Reporting Standards, has resolved to issue the following:

RESOLUTION MODIFYING THE GENERAL PROVISIONS APPLICABLE TO

GENERAL WAREHOUSE RECEIPTS, EXCHANGE HOUSES, CREDIT

UNIONS AND REGULATED MULTIPLE-OBJECT FINANCIAL COMPANIES

SINGLE.- Annex 4, Criterion B-2 "Investments in Securities" of the "General Provisions applicable to general warehouse receipts, exchange houses, credit unions, and regulated multiple-object financial companies", published in the Official Gazette of the Federation on January 19, 2009, and modified by resolutions published in said Official Gazette on July 1 and 30, 2009; February 18, 2010; February 4, April 11, and December 22, 2011; February 3 and June 27, 2012; January 31, 2013; December 3, 2014; January 8 and 12, May 19, October 19 and 28, 2015; January 22, May 13, September 28, and December 27, 2016; February 28 and April 4, 2017, is REFORMED, to read as follows:

TITLES FIRST to EIGHTH . . .

Annexes 1 to 3 . . .

Annex 4

Accounting Criteria for Credit Unions.

Annexes 5 to 27 . . .

TRANSITORY PROVISIONS

FIRST.- This Resolution shall enter into force the day following its publication in the Official Gazette of the Federation.

SECOND.- Criterion B-2 "Investments in Securities" of the "Series B Criteria relating to the concepts that integrate financial statements", contained in Annex 4 which is modified by this Resolution, shall be applied prospectively in accordance with what is provided by Financial Information Standard B-1 "Accounting Changes and Corrections of Errors" issued by the Mexican Council for Financial Reporting Standards A.C., so that credit unions will not be required to reevaluate the classifications of investments in securities previously recognized. Investments in securities classified prior to the entry into force of this instrument must maintain the classification granted in accordance with the accounting criteria in effect on the date of their transaction. In any case, credit unions must disclose in the notes to the financial statements the main changes in accounting standards for investments in securities that affected or could significantly affect their financial statements.

Respectfully,

Mexico City, July 13, 2017.- The President of the National Banking and Securities Commission, Jaime González Aguadé.- Signature.

B-2 INVESTMENTS IN SECURITIES

Objective and Scope

This criterion aims to define the specific rules regarding the recognition, valuation, presentation, and disclosure in financial statements of operations with investments in securities carried out by entities.

1

The following aspects are subject to this criterion:

a)

initial recognition and valuation of investments in securities;

b)

subsequent recognition of gains or losses derived from investments in securities;

c)

recognition of impairment of investments in securities, and

d)

derecognition of investments in securities from the entities' balance sheets.

2

The following topics are not subject to this criterion:

a)

reports;

b)

derivatives and hedging operations;

c)

permanent investments contemplated by Financial Information Standard B-8 "Consolidated or Combined Financial Statements", Financial Information Standard C-7 "Investments in Associates, Joint Ventures and Other Permanent Investments", and Financial Information Standard C-21 "Agreements with Joint Control";

d)

investments derived from pension and retirement plans, and

e)

assets adjudicated.

Definitions

3

Amortized Cost.- For the purposes of this criterion, it is the amount at which a financial asset is valued, resulting from adjusting the value at which it is initially recognized by (i) payments of principal, (ii) plus or minus the accumulated amortization, using the effective interest method, of any difference between the value at which it is initially recognized and its value at maturity, and (iii) less any reduction in value due to impairment.

4

Transaction Costs.- For the purposes of this criterion, these are those incremental costs directly attributable to the acquisition or disposal of a financial asset. A cost is incremental if it would not have been incurred had the financial instrument not been acquired or disposed of. For example, commissions paid to agents, consultants, brokers, as well as charges by stock exchanges, among others. Transaction costs do not include discounts or premiums received or paid for debt securities, financing costs, or internal administrative costs.

5

Impairment.- It is the existing condition when the book value of investments in securities exceeds the recoverable amount of said securities.

6

Equity Instruments.- An asset represented through a title, certificate, or right derived from a contract, among others, which represents a residual participation in the assets of an entity, after deducting all its liabilities, such as shares, partnership interests, residual interests, among others.

7

Investments in Securities.- Those made in assets constituted by equity instruments, obligations, bonds, certificates, and other credit instruments and documents that are issued in series or in bulk and that the entity holds in its own position.

8

Effective Interest Method.- It is that by which the amortized cost of a financial asset or financial liability (or group thereof) and the recognition of financial income or expense over the relevant period are calculated. The foregoing, by applying the effective interest rate, that is, the discount rate that exactly equates the estimated future cash flows to be received or paid over the expected life of the financial asset or financial liability, or when appropriate, over a shorter period (for example, when there is the possibility of an early payment or redemption), with the net book value of said financial asset or financial liability.

9

Credit Risk.- It is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to meet an obligation.

10

Market Risk.- It is the risk that the fair value or future cash flows of a financial instrument may fluctuate as a result of changes in market prices. Market risk comprises three types of risks: exchange rate risk (originated by variations in the exchange rate), interest rate risk (coming from variations in market interest rates), and other price risks (caused by particular factors of the specific financial instrument or its issuer, or by factors that affect all similar financial instruments traded in the market).

11

Effective Interest Rate.- Rate obtained by estimating cash flows considering all contractual conditions of the financial instrument (for example, commissions and interest paid or received by the parties to the contract, transaction costs, and any other premium or discount), without considering future credit losses. When exceptionally the cash flows and expected life of a group of substantially similar financial assets cannot be estimated reliably, the entity will use the contractual cash flows over the contractual period of each financial asset.

12

Securities Held to Maturity.- These are debt securities, whose payments are fixed or determinable and with a fixed maturity (which means that a contract defines the amounts and dates of payments to the holding entity), with respect to which the entity has both the intention and the capacity to hold them until maturity. A security cannot be classified as held to maturity if during the current fiscal year or during the two previous fiscal years, the entity sold securities classified in the held-to-maturity category, or reclassified securities from the held-to-maturity category to the available-for-sale category, unless the amount sold or reclassified during the last 12 months does not represent more than 15% of the total amount of securities held to maturity at the date of the transaction. The foregoing, regardless of whether the securities to be classified, the previously sold, or the reclassified have similar or dissimilar characteristics. In this regard, it will be considered that both the intention and the capacity to hold the securities until maturity have been maintained when sales or reclassifications previously made are in any of the following circumstances:

a)

they are carried out within the 90 natural days prior to their maturity or, in their case, the date of the issuer's call option;

b)

they occur after the entity has accrued or, in their case, collected more than 85% of their original value in nominal terms, or

c)

they are attributable to an isolated event that is outside the entity's control, that is not recurring, and that could not have been reasonably foreseen by the entity.

13

Debt Securities.- These are instruments that, in addition to constituting a right for one party and an obligation for the other, have a known term and generate cash flows for the holder of the securities during or at the maturity of said term.

14

Available-for-Sale Securities.- These are debt securities and equity instruments, whose intention is not oriented to obtaining gains derived from price differences resulting from short-term buying and selling operations, and in the case of debt securities, there is neither the intention nor the capacity to hold them until maturity; therefore, they represent a residual category, that is, they are acquired with an intention different from that of securities for trading or held to maturity, respectively.

15

Securities for Trading.- These are securities that entities acquire with the intention of disposing of them, obtaining gains derived from price differences resulting from short-term buying and selling operations, which they carry out as market participants.

16

Book Value.- It is the balance of an investment in a security, including adjustments for valuation results, interest, accrued but uncollected dividends, impairment loss, or any other adjustment that corresponds to it, as the case may be, as determined in accordance with this criterion.

17

Fair Value.- The amount for which an asset can be exchanged or a liability settled between informed, interested, and equally willing parties in a free competition transaction.

18

Classification

At the time of their acquisition, investments in securities shall be classified as securities for trading, available-for-sale securities, or securities held to maturity. Each of these categories has specific rules regarding recognition, valuation, and presentation standards in financial statements.

19

The classification between the categories of securities for trading and available-for-sale securities shall be made by the entity's management, based on the intention at the time of acquiring a specific instrument with respect to it. To classify an instrument in the held-to-maturity category, it must:

i.

have the intention and capacity to hold them until maturity, and

ii.

not be unable to classify them as held to maturity in accordance with what is stated in paragraph 13.

Recognition Standards

20

At the time of their acquisition, investments in securities shall be initially recognized at their fair value (which includes, if applicable, the discount or premium), in accordance with what is established for such purposes in criterion C-1 "Recognition and Derecognition of Financial Assets".

21

Transaction costs for the acquisition of securities shall be recognized, depending on the category in which they are classified, as follows:

a)

Securities for Trading.- In the results of the fiscal year on the date of acquisition.

b)

Available-for-Sale and Held-to-Maturity Securities.- Initially as part of the investment.

22

For the derecognition from the balance sheet of investments in securities, the guidelines provided for such purposes in criterion C-1 must be followed, as well as what is stated in paragraph 30.

Valuation Standards

General Valuation Standards

23

Securities for trading and available-for-sale securities shall be valued at their fair value.

24

Securities held to maturity shall be valued at their amortized cost, which implies that the amortization of the premium or discount (included, if applicable, in the fair value at which they were initially recognized), as well as transaction costs, will form part of accrued interest.

Accrued Interest

25

Accrued interest on debt securities shall be determined in accordance with the effective interest method and recognized in the corresponding category within the investments in securities item against the results of the fiscal year (including in the case of available-for-sale securities). At the moment when accrued interest is collected, the investments in securities item must be decreased against the cash and cash equivalents item.

Dividends

26

Dividends on equity instruments shall be recognized in the corresponding category within the investments in securities item against the results of the fiscal year (including in the case of available-for-sale securities), at the moment when the right to receive payment is generated. When dividends are collected, the investments in securities item must be decreased against the cash and cash equivalents item.

Valuation Result for Securities for Trading and Available for Sale

27

The valuation result of securities for trading shall be recognized in the results of the fiscal year.

28

The valuation result of available-for-sale securities shall be recognized in other comprehensive income items within equity. In the case where a security classified as available for sale constitutes a hedged item in a fair value hedge, in accordance with what is established in criterion B-4 "Derivatives and Hedging Operations", the valuation result of said security must be recognized in the results of the fiscal year. In the case of an inflationary environment, the valuation result corresponding to the monetary position of available-for-sale securities must be recognized in other comprehensive income items within equity.

29

The valuation result of securities for trading that are disposed of, which has been previously recognized in the results of the fiscal year, must be reclassified as part of the gain or loss on sale on the date of the sale. Likewise, the accumulated valuation result of available-for-sale securities that are disposed of, which has been recognized in other comprehensive income items within equity, must be reclassified as part of the gain or loss on sale on the date of the sale.

Gain or Loss on Exchange

30

The gain or loss on exchange arising from investments in securities denominated in foreign currency shall be recognized in the results of the fiscal year.

Reclassifications

31

Reclassifications from the held-to-maturity category to available for sale may be made, provided that there is no intention or capacity to hold them until maturity. Reclassifications to the held-to-maturity category, or from securities for trading to available for sale, may be made in extraordinary circumstances (for example, lack of liquidity in the market, no active market for it, among others), which will be evaluated and, if applicable, validated through express authorization by the CNBV.

32

Sales of securities classified as held to maturity may satisfy the conditions established in paragraph 13(c) and, therefore, do not raise doubts about the entity's intention to hold other investments until maturity, provided they are attributable to any of the following circumstances:

a)

Significant deterioration in the credit rating of the issuer.

b)

A change in tax laws affecting the tax treatment of the instrument's yields, and therefore its value.

c)

A business combination or restructuring involving the sale of a business segment including the financial instrument held to maturity.

d)

Modification of the regulations to which an entity may be subject and that affect the relationship of assets and equity.

33

The valuation result corresponding to the date of reclassification, in the event of reclassifying from the held-to-maturity category to available for sale, must be recognized in other comprehensive income items within equity.

34

The valuation result shall be understood as the difference resulting from comparing the book value with the fair value on the date the aforementioned reclassification takes place.

35

For those debt securities that had been authorized to effect the reclassification from the available-for-sale category to the held-to-maturity category, the valuation result corresponding to the date of the transfer shall continue to be reported in the entity's equity, and must be amortized based on the remaining life of said security.

36

Regarding reclassifications that may have been authorized from the securities for trading category to any other, the valuation result on the date of the reclassification must have been previously recognized in the statement of results.

Clearing Accounts

37

Securities acquired that are agreed to be settled on a date subsequent to the agreement of the buying and selling operation and that have been assigned, that is, identified, shall be recognized as restricted securities (to be received) at the time of the agreement, while the sold securities shall be recognized as an outflow of investments in securities (to be delivered). The counterpart must be a clearing account, creditor or debtor, as appropriate, in accordance with what is established in criterion A-3 "Application of General Standards".

Impairment in the Value of a Security

38

Entities must evaluate whether, at the balance sheet date, there is objective evidence that a security is impaired.

39

A security is considered impaired and, therefore, an impairment loss is incurred, if and only if, there is objective evidence of impairment as a result of one or more events that occurred subsequent to the initial recognition of the security, which had an impact on its estimated future cash flows that can be determined reliably. It is unlikely to identify a single event that individually is the cause of the impairment; it is more likely that the combined effect of various events could have caused the impairment.

40

Objective evidence that a security is impaired includes observable information, among others, regarding the following events:

a)

significant financial difficulties of the security issuer;

b)

it is probable that the security issuer will be declared bankrupt or undergo another financial reorganization;

c)

default on contractual clauses, such as failure to pay interest or principal;

d)

the disappearance of an active market for the security in question due to financial difficulties, or

e)

there is a measurable decrease in the estimated future cash flows of a group of securities since the initial recognition of said assets, although the decrease cannot be identified with the individual values of the group, including:

i.

adverse changes in the payment status of issuers in the group, or

ii.

local or national economic conditions that correlate with defaults on securities in the group.

41

In addition to the events mentioned above, objective evidence of impairment for an equity instrument includes information about significant adverse changes that have taken place in the technological, market, economic, or legal environment in which the issuer operates, and indicates that it is probable that the cost of the investment in the equity instrument will not be recoverable.

42

The disappearance of an active market because a security is no longer publicly traded is not necessarily evidence of impairment. A decrease in an entity's credit rating is not by itself evidence of impairment; however, it could be when considered

in combination with additional information. A decrease in the fair value of a security below its amortized cost is not necessarily evidence of impairment (for example, a decrease in the fair value of a debt security resulting from an increase in the risk-free interest rate, such as the interest rate relative to treasury bills issued by the Federal Government).

43

In some cases, the observable information required to estimate the amount of the impairment loss on a security may be limited or cease to be relevant in certain circumstances, so the entity will use its judgment based on its experience to determine such impairment loss.

Securities for Trading

44

Because securities for trading are valued at fair value, recognizing the valuation result immediately in the earnings of the period, any impairment loss that may arise with respect to such securities would already be implicit in the aforementioned valuation result, so it is not necessary to perform the impairment assessment referred to in this section.

Available-for-Sale Securities

45

When a decrease in the fair value of an available-for-sale security has been recognized directly in other comprehensive income items within equity, and there is objective evidence that the security is impaired, the valuation result recognized there will be reclassified to the earnings of the period. The amount to be reclassified will be determined as follows:

a)

the difference between (i) the value at which the security was initially recognized, net of any principal payments and amortization, and (ii) the current fair value of the security, minus

b)

any impairment loss on the aforementioned security previously recognized in the earnings of the period.

46

The impairment loss recognized in the earnings of the period on an equity instrument classified as available for sale shall not be reversed.

47

If, in a subsequent period, the fair value of a debt security classified as available for sale increases and such effect of the reversal of impairment can be objectively related to an event that occurs after the impairment was recognized in the earnings of the period, the impairment loss shall be reversed in the earnings of the period.

Held-to-Maturity Securities

48

If there is objective evidence that an impairment loss has been incurred with respect to a held-to-maturity security, the amount of the loss will be determined by the difference between the book value of the security and the present value of estimated future cash flows, discounted at the original effective interest rate of the security (for example, the effective interest rate calculated at initial recognition). The book value of the security shall be reduced, recognizing the impairment loss in the earnings of the period.

49

If, in a subsequent period, the amount of the impairment loss decreases and such decrease can be objectively related to an event that occurs after the impairment was recognized, the previously recognized impairment loss shall be reversed. The effect of the reversal of impairment shall not exceed the amortized cost that the security would have had on that date, if impairment had not been recognized. Such effect shall be recognized in the earnings of the period.

Presentation Standards

Balance Sheet

50

Investments classified as securities for trading, available-for-sale securities, and held-to-maturity securities shall be presented separately in the securities investments item, maintaining that same order.

51

The valuation result of available-for-sale securities, as well as the valuation monetary position result corresponding to such valuation, in the event of an inflationary environment, shall be presented in the item for valuation result of available-for-sale securities as part of other comprehensive income items within equity.

Income Statement

52

Accrued interest and yields and gains or losses from changes in securities investments, as well as dividends from equity instruments, shall be presented in the item for interest income or interest expense, as applicable.

53

The fair value valuation result of securities for trading, the result from the purchase and sale of securities investments, the amount of impairment loss on available-for-sale and held-to-maturity securities, or the effect of the reversal of impairment of debt securities classified as available-for-sale or held-to-maturity whose value was previously adjusted for impairment, as well as transaction costs for securities for trading, shall be included within the item for intermediation result.

Disclosure Standards

54

Entities shall disclose in the notes to the financial statements the following information relating to securities investments:

a)

The book value of securities investments for each category of securities.

b)

In the event that the entity has sold held-to-maturity securities, it shall disclose in its financial statements and inform the CNBV of the amount and type of securities sold, the remaining time for which the held-to-maturity category cannot be used in the classification of securities, as well as an explanation of the reasons for such situation.

c)

If the entity has reclassified a security from the held-to-maturity category to the available-for-sale category, it shall disclose the amount and type of securities reclassified, the reason for such reclassification, the remaining time for which the held-to-maturity securities category cannot be used in the classification of securities, as well as an explanation of the reasons for such situation.

d)

In the event that the entity, in accordance with what is established in the Reclassifications section of this standard, has obtained authorization from the CNBV to reclassify securities, disclosure of this fact is required, specifically indicating the category from and to which the reclassification was made, as well as the characteristics of the reclassified securities in terms of: their number, weighted average rate, and type of issuer. Likewise, the book value and fair value of the securities as of the date of the financial statements shall be disclosed, when these have been transferred to the held-to-maturity securities category, or the effect of the fair value valuation on that date if the transfer has been from the securities for trading category to the available-for-sale category.

e)

The fair value of securities investments that have been pledged as collateral, including those that may have been reclassified as restricted in accordance with what is established in standard C-1.

f)

The terms and conditions related to the collateral.

g)

If the entity receiving collateral (consisting of financial or non-financial assets) has the right to sell or pledge it, without there being a default by the entity granting the collateral, in terms of what is established in standard C-1, it shall disclose:

i.

the fair value of the collateral received;

ii.

the fair value of any collateral sold or pledged, and

iii.

the terms and conditions associated with the use of the collateral.

h)

Net gains or losses on:

i.

securities for trading;

ii.

available-for-sale securities, showing separately the valuation result recognized in other comprehensive income items within equity during the period and the amount reclassified to the earnings of the period, and

iii.

held-to-maturity securities.

i)

The total interest income and total interest expense of securities.

j)

Income and expenses from commissions generated by securities.

k)

Accrued interest income on impaired securities.

l)

The amount of impairment for each category of available-for-sale and held-to-maturity securities.

m)

The amount and origin of the effect of the reversal of impairment of available-for-sale and held-to-maturity securities.

n)

Accounting policies relating to the valuation bases used in securities investments.

o)

Any extraordinary event affecting the valuation of securities investments.

p)

Information that allows users of the entity's financial statements to evaluate the nature and degree of risks arising from securities investments (for example, the type of risk and its characteristics, as well as to what extent they affect the entity), including but not limited to credit and market risk, to which said entity is exposed at the end of the period, as well as the manner in which such risks are managed (for example, the establishment of a monitoring group whose function is the supervision and determination of risks, as well as the degree of compliance with the policies established for such purposes).

q)

Qualitative disclosure.

For each type of risk arising from securities investments:

i.

the risk exposures and how they arise;

ii.

their objectives, policies, and processes for managing risk and the methods used to measure them, and

iii.

any change in (i) or (ii), with respect to the previous period.

r)

Quantitative disclosure.

For each type of risk arising from securities investments:

i.

a summary of quantitative information about its risk exposures at the end of the period, which shall be based on internally provided information to the key management personnel of the entity;

ii.

the quantitative disclosure for each type of risk (credit and market) detailed in items t) and u), to the extent not provided in accordance with the previous item (i), unless the risk is not material, and

iii.

risk concentrations, if not evident in accordance with the previous items (i) and (ii).

s)

If the quantitative information disclosed at the end of the period is not representative of the entity's exposure to risk during the period, additional representative information shall be provided.

t)

With respect to credit risk:

For each category of securities:

i.

the amount that best represents the maximum exposure to credit risk at the end of the period, without taking into account any collateral received or other type of credit enhancement (for example, guarantees);

ii.

with respect to the amount disclosed in the previous item (i), a description of the collateral received or other type of credit enhancements;

iii.

information on the credit quality of securities investments that are not impaired;

iv.

the book value of securities investments whose terms have been renegotiated, and which would otherwise be impaired;

v.

an analysis of securities investments that have been individually impaired at the end of the period, including the factors the entity considered for such purposes, and

vi.

with respect to the amounts disclosed in the previous item (v), a description of the collateral received by the entity and other credit enhancements and, unless impracticable, an estimate of their fair value.

If an entity obtains financial or non-financial assets during the period, exercising the collateral or requesting other types of credit enhancements, and said assets meet the recognition standards contained in the accounting standards for credit unions, the following shall be disclosed:

i.

the nature and book value of the assets obtained, and

ii.

when the assets are not immediately convertible into cash, the policies to sell said assets, or to use them in operations.

u)

With regard to market risk, a sensitivity analysis for each type of market risk to which the entity is exposed at the end of the period, showing:

i.

the methods, main parameters, and assumptions used for the preparation of the analysis;

ii.

an explanation of the objective of the method used and of the limitations that could result in the information not fully reflecting the fair value of the securities investments, and

iii.

changes in the methods and assumptions used in the previous period, as well as the reasons for such changes.

v)

Securities investments other than government securities, which are composed of debt securities from the same issuer and represent more than 5% of the entity's net capital, indicating the main characteristics of these (issuance, weighted average term to maturity, and weighted average rate). Net capital shall be determined in accordance with the capital requirements established by the CNBV through general provisions.

w)

In the event that the entity acquires fiduciary rights issued by a trust and such issuance has been in series or in bulk, the underlying asset of said fiduciary rights, as well as the amount, term, and other characteristics thereof, shall be disclosed.

Appendix A is an integral part of standard B-2. Its content illustrates the application of this standard, in order to clarify its meaning.

APPENDIX A

APPLICATION GUIDE

Classification in the held-to-maturity securities category

Intention and capacity

For the purposes of the Reclassifications section, an entity does not have the intention to hold debt securities until maturity if at least one of the following assumptions is met:

a)

the entity intends to hold the security for an indefinite period;

b)

the entity is willing to sell the security (due to circumstances other than isolated events that are not subject to the entity's control, are not recurring, and could not have been reasonably anticipated by the entity) in response to changes in market interest rates or risks, liquidity needs, changes in the availability and profitability of alternative investments, changes in terms and sources of financing, or changes in foreign exchange risk, or

c)

the issuer has the right to settle a security for an amount significantly lower than its amortized cost.

GA1

For the purposes of the Reclassifications section, an entity does not have a demonstrated capacity to hold until maturity an investment in a security with a fixed maturity if:

a)

it does not have available financial resources to continue financing its investment until maturity, or

b)

it is subject to a legal or other type of restriction that may frustrate its intention to hold the investment until maturity.

Specific Cases

GA2

Variable interest rate debt securities may meet the conditions to be classified as held-to-maturity securities.

GA3

Credit risk does not prevent a security from being classified as held-to-maturity, provided that contractual payments are fixed and determinable, and that the other conditions for such classification are met.

GA4

An entity's intention and capacity to hold debt securities until their maturity is not necessarily affected if such securities have been pledged as collateral in repo operations. Notwithstanding the foregoing, the entity does not have the intention or capacity to hold debt securities until maturity if it does not expect to be able to maintain or recover access to said securities.

GA5

If the issuer of a security has a repurchase option, it meets the conditions to be classified as held-to-maturity if the entity has the intention and capacity to hold it until the date on which the issuer can repurchase it or until its maturity, and this recovers substantially its book value. The issuer's repurchase option simply accelerates the maturity of the security.

GA6

A security with a put option cannot be classified as held-to-maturity, because the fact of paying a premium for said option is inconsistent with the intention to hold it to maturity.

GA7

Equity instruments cannot be classified as held-to-maturity because they have an indefinite life period (such as shares), or because the amounts the entity might receive would vary in a non-predetermined manner. Likewise, if the terms of a perpetual debt security contemplate interest payments for an indefinite time, the security cannot be classified as held-to-maturity.

GA8

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