Annual Report | 2002
ACTIVE MEMBERS ABN AMRO Bank N.V. American Express Bank Ltd. S.A. Banca Nazionale del Lavoro S.A. Banco Bradesco Argentina S.A. Banco Comafi S.A. Banco de Galicia y Buenos Aires S.A. Banco de la República Oriental del Uruguay Banco de Valores S.A. Banco Europeo para América Latina (B.E.A.L.) S.A. Banco Itaú Buen Ayre S.A. Banco Mariva S.A. Banco Patagonia S.A. Banco Privado de Inversiones S.A. Banco Río de la Plata S.A. Banco Roela S.A. Banco Sáenz S.A Banco Société Générale S.A. Banco Sudameris Argentina S.A. Bank of America N.A. BankBoston N.A. BBVA Banco Francés S.A. BNP Paribas Citibank N.A. Deutsche Bank S.A. HSBC Bank Argentina S.A. ING Bank N.V. (Argentine Branch) JP Morgan Chase Bank, Buenos Aires Branch LloydsTSB Bank plc MBA Banco de Inversiones S.A. Providian Bank S.A. The Bank of Tokyo-Mitsubishi, Ltd.
Annual Report | 2002
ASSOCIATED MEMBERS Banco de la Nación Argentina Banco de la Ciudad de Buenos Aires Banco de Inversión y Comercio Exterior S.A. Banca del Gottardo Banca di Roma Societá per Azioni Banco BBA-Creditanstalt S.A. Banco Bilbao Vizcaya S.A. Banco Comercial S.A. Banco de Crédito S.A. Banco de Chile Banco de Finanzas e Inversiones S.A. Banco Dibens S.A. Banco Latinoamericano de Exportaciones Banco Santander Central Hispano S.A. Bank LEU AG Barclays Bank PLC Bayerische Hypo-und Vereinsbank AG BPD International Bank BSI Banca Della Svizzera Italiana Commerzbank AG Cooperatieve Centrale Raiffeisen-Boerenleebank B.A. (Rabobank) Credit Agricole Indosuez Credit Lyonnais Credit Suisse Discount Bank and Trust Company Dresdner Bank AG Dresdner Bank Lateinamerika AG First Union National Bank Natexis Banques Populaires Sanpaolo IMI S.p.A. Standard Bank London Limited Standard Chartered Bank The Bank of New York The Bank of Nova Scotia Union Bancaire Privée CBI-TDB
Annual Report | 2002
BOARD OF DIRECTORS
President: st
MARIO VICENS
1 Vice President:
BANKBOSTON N.A. Manuel R. Sacerdote
2nd Vice President:
CITIBANK N.A. Juan J. Bruchou (*)
3rd Vice President:
BANCO RÍO DE LA PLATA S.A. Enrique Cristofani
th
4 Vice President:
BANCO DE GALICIA Y BUENOS AIRES S.A. Juan Martín Etchegoyhen
Secretary:
BBVA BANCO FRANCÉS S.A. Jaime Guardiola
Pro-Secretary:
HSBC BANK ARGENTINA S.A. Emilio J. Cárdenas
Recording Secretary:
BANCO PATAGONIA S.A. Jorge Stuart Milne
Treasurer:
BANCO SUDAMERIS ARGENTINA S.A. Carlos González Taboada
Pro-Treasurer:
DEUTSCHE BANK S.A. Patricio E. Kelly
Members: BANCA NAZIONALE DEL LAVORO S.A. Tullio Lanari BANK OF AMERICA N.A. Alejandro Ledesma ING BANK N.V. (Argentine Branch) Jaap Manse LLOYDS TSB Bank plc Nigel Hubbard
(*)
Until october 2002, Mr. Carlos Giovanelli.
Annual Report | 2002
JP MORGAN CHASE BANK, Buenos Aires Branch Marcelo Podestá BANCO COMAFI S.A. Guillermo Cerviño BANCO ITAÚ BUEN AYRE S.A. Rodolfo Corvi BANCO MARIVA S.A. José Luis Pardo BANCO SOCIÉTÉ GÉNÉRALE S.A. Marc Emmanuel Vives BANCO EUROPEO PARA AMÉRICA LATINA (B.E.A.L.) S.A. Jean - Pierre Smeets Alternate Members: BANCO DE VALORES S.A. Julio A. Macchi AMERICAN EXPRESS BANK Ltd. S.A. Sebastián Peña Mc Gough BANCO ROELA S.A. Víctor Mondino Honorary President:
Julio J. Gómez
Audit of Accounts: Titular:
ABN AMRO BANK N.V. José Oscar Fernández
Alternate:
BANCO SÁENZ S.A. Raúl A. Frávega
Director:
Norberto C. Peruzzotti
Annual Report | 2002
SPECIALIZED COMMISSIONS FINANCIAL AFFAIRS AND CAPITAL MARKETS Coordinating Secretaries (1) Eduardo Trucco - Citibank N.A. Gabriel E. Castelli - HSBC Bank Argentina S.A. (2) LEGAL AFFAIRS Coordinating Secretaries Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. José Luis Espino - Banco Société Générale S.A. BANK AUDITING Coordinating Secretaries Ricardo Escubós - HSBC Bank Argentina S.A. Eulogio Alfaraz - Scotiabank Quilmes S.A.(3) WHOLESALE AND INVESTMENT BANKING Coordinating Secretary Patricio Kelly - Deutsche Bank S.A. Alternate Alejandro Ledesma - Bank of America N.A. RETAIL BANKING Coordinating Secretary Guillermo Goldberg - Citibank N.A. Alternate Guillermo Laje - Banco de Galicia y Buenos Aires S.A. INSURANCE BANKING Coordinating Secretary Guillermo Bronenberg - Citibank N.A. Alternate José Luis D'Alessio - BankBoston N.A.. QUALITY AND CUSTOMER SATISFACTION Coordinating Secretaries Santiago Loza - Banco Río de la Plata S.A. (4) Juan Altomare - BBVA Banco Francés S.A. Alternate Carlos Pantano - Banco de Galicia y Buenos Aires S.A. TRAINING Coordinating Secretary Guillermo Santana - Banco de Galicia y Buenos Aires S.A. E-COMMERCE Coordinating Secretary To be appointed
Annual Report | 2002
TRUST Coordinating Secretary Federico Kralj - BBVA Banco Francés S.A. TAXATION Coordinating Secretary Bruno Folino - Banco de Galicia y Buenos Aires S.A. Alternates Carlos del Mauro - Banca Nazionale del Lavoro S.A. Luis Irigoyen - BBVA Banco Francés S.A. Adriana Cargioli de Vaín - Banco Río de la Plata S.A. BANK MARKETING Coordinating Secretary To be appointed MERCOSUR Coordinating Secretary To be appointed ACCOUNTANT AND INFORMATION STANDARDS Coordinating Secretaries Raúl Estévez - Banco de Galicia y Buenos Aires S.A. Juan José Pardo - Banca Nazionale del Lavoro S.A. TRANSACTIONS Coordinating Secretaries Hugo Vacca Núñez - BankBoston N.A. (5) Francisco Santos - Banco Río de la Plata S.A. Alternates José Busto Bran - Banca Nazionale del Lavoro S.A. Luis Gonzato - BBVA Banco Francés S.A. FOREIGN TRADE TRANSACTIONS Coordinating Secretary Juan Carlos Raschi - BankBoston N.A. Alternates Luis Martínez - HSBC Bank Argentina S.A. Renata Vittek - Deutsche Bank S.A. SECURITIES TRANSACTIONS Coordinating Secretary María Rosa Eiras - BankBoston N.A. Alternate Claudia Po - Citibank N.A. PREVENTION OF MONEY LAUNDERING Coordinating Secretaries Rubén J. Silvarredonda - Banca Nazionale del Lavoro S.A. Enrique Antonini - Banco Mariva S.A.
Annual Report | 2002
INTERNATIONAL BANKING RELATIONS Coordinating Secretary (6) María Seljak - BBVA Banco Francés S.A. Alternates Mauro Mazzarelli Banca Nazionale del Lavoro S.A. Sergio Lew - Banco Río de la Plata S.A.(7) LABOUR RELATIONS Coordinating Secretary Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. Alternate Enrique Eckert - HSBC Bank Argentina S.A.(8) RELATIONS AND COMMUNICATIONS Coordinating Secretaries Oscar Correa - Banco Río de la Plata S.A. Roberto Gandini - Banco de Galicia y Buenos Aires S.A.(9) Alternate Carlos Martínez - Banca Nazionale del Lavoro S.A. CREDIT RISK Coordinating Secretary Guillermo Pando - Banco de Galicia y Buenos Aires S.A. Alternate José Dávola - Lloyds TSB Bank plc (10) BANK SECURITY Coordinating Secretary Horacio Patalano - Banco Comafi S.A. Alternate Roberto Veltri - Banco Río de la Plata S.A. TECHNOLOGY, ORGANIZATION AND SYSTEMS Coordinating Secretary To be appointed Alternates José Busto Bran - Banca Nazionale del Lavoro S.A. Claudio Troccoli - Banco Río de la Plata S.A.
(1)
Until 7.24.02 Luis Ribaya (Banco de Galicia y Buenos Aires S.A.) Until 7.24. 02 Carlos A. Seijas (Banco Europeo para América Latina (B.E.A.L.) S.A. (3) Until 7.5.02 (4) Until 5.3.02 (5) Until 5.30.02 (6) Until 10.1.02 C. Enrique Martín (Banco de Galicia y Buenos Aires S.A.) (7) Until 6.12.02 Armando Feira (Scotiabank Quilmes S.A.) (8) Until 8.6.02 (9) Until 5.31.02 (10) Until 6.7.02 José M. Pérez Morón (Banco Río de la Plata S.A.) (2)
Annual Report | 2002
INSTITUTIONAL REPRESENTATIVES NATIONAL CUSTOMS ADMINISTRATION Consultative Customs Committee: Juan Carlos Raschi - BankBoston N.A. (Member) Luis Martínez - HSBC Bank Argentina S.A. (Alternate Member) CIVIL ASSOCIATION FOR THE PROMOTION OF THE MICROCENTER
Omar Tittarelli - Banco de Galicia y Buenos Aires S.A. Norberto López Isnardi - Colegio Liberty-UADE ARGENTINE BANK MARKETING ASSOCIATION Norberto Carlos Peruzzotti - Director of ABA CENTRAL BANK OF THE ARGENTINE REPUBLIC Interbank Commission for Means of Payment in the Argentine Republic: Antonio Garcés - Banco de Galicia y Buenos Aires S.A. (Member) Carlos González Taboada - Banco Sudameris Argentina S.A. (Member) Hugo Vacca Nuñez - BankBoston N.A. (Alternate Member) Carlos Gallo (1)- Banco de Galicia y Buenos Aires S.A. (Alternate Member) BUENOS AIRES STOCK EXCHANGE Council: Mario Vicens - President of ABA BANK SECURITY ADVISORY COMMISSION Horacio Patalano - Banco Comafi S.A. Diego Uribe (2)- ABA José M. Torchetti - ABA Jorge Severino - ABA ARGENTINE INTERBANKING COMMISSION OF BOLERO Juan C. Raschi - BankBoston N.A. (1st Vice President) Diego Uribe (2) - ABA (2nd Vice President) ARGENTINE - GERMAN JOINT COMMITTEE Norberto Carlos Peruzzotti - Director of ABA (Member) Renata Vittek - Deutsche Bank S.A. (Alternate Member) JOINT ARGENTINE - JAPANESE BUSINESS COMMITTEE Julio J. Gómez - Honorary President of ABA STAF COMMITTEE - B.C.R.A. José Mario Torchetti - ABA
Annual Report | 2002
FOREIGN TRADE ENTREPRENEURIAL ADVISORY COMMISSION Juan C. Raschi - BankBoston N.A. INTERAMERICAN COUNCIL OF COMMERCE & PRODUCTION - ARGENTINE SECTION Norberto C. Peruzzotti - Director of ABA (Vocal) FELABAN Titular Governor: Mario Vicens - President of ABA Argentine Commission for Felaban M. Cristina Ehbrecht - ABA ARGENTINE FORUM OF E-COMMERCE Claudio Migliore - Banco Río de la Plata S.A. Diego Uribe (2) - ABA EXPORT.AR FOUNDATION Mario Vicens - President of ABA (Member) ARGENTINE FEDERAL POLICE FOUNDATION Administrative Committee: Norberto Carlos Peruzzotti - ABA (Treasurer) Mario Vicens - ABA Eduardo J. Escasany - ABA Abel Ayerza - ABA M. Cristina Ehbrecht - ABA Auditing Committee: Horacio Bauer - ABA ARGENTINE STANDARDIZATION INSTITUTE - IRAM José M. Torchetti - ABA - Image Processing Subcommittee - Bullet-proof Glass Subcommittee / Flat Glass for Construction Works - Bank Services, Operations and Supplies Subcommittee - Microreproduction Subcommittee - Bank Quality Subcommittee OTC MARKET President st 1 Vice President nd 2 Vice President
Marcelo Castro - Banco Río de la Plata S.A. Jesús Luis D'Alessandro - Banco de la Nación Argentina Eduardo E. Trucco - Citibank N.A.
Annual Report | 2002
Directors
Jorge Bledel - BBVA Banco Francés S.A. Gabriel Castelli - HSBC Bank Argentina S.A. Luis Ribaya - Banco de Galicia y Buenos Aires S.A. Daniel Passaro - BankBoston N.A. Carlos Planas - Deutsche Bank S.A.
Alternate Directors
Marcelo Scenna - Lloyds TSB Bank plc Jorge Gilligan - Banco Mariva S.A. Luis Castresana - Banco Itaú Buen Ayre S.A. Guillermo Cerviño - Banco Comafi S.A. Diego Ronconi - Banco Sáenz S.A. Pablo Cousido - Banca Nazionale del Lavoro S.A. Jorge A. Caracoche - Banco de la Ciudad de Buenos Aires Carlos Seijas - Banco Europeo para América Latina (B.E.A.L.) S.A.
Shareholder's Audit Committee
Alejandro Ledesma - Bank of America N.A. José Fernández - ABN AMRO Bank N.V. Esteban Benegas Lynch - JP Morgan Chase Bank, Buenos Aires Branch
SECURITIES MARKET Vice President Director
Mario S. Rossi - BankBoston N.A. Félix Lafiandra - Banco Comafi S.A.
MERCOSUR Mercosur Banking Association Group: M. Cristina Ehbrecht - ABA María Elena Deligiannis - ABA Liaison with N° 4 Work Subgroup “Financial Business” of the Mercosur: María Elena Deligiannis - ABA Liaison with N° 10 Work Subgroup “Labour Relations, Employment and Social Security" of the Mercosur: Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. MINISTRY OF LABOUR, EMPLOYMENT AND TRAINING ON HUMAN RESOURCES National Economic Council for Employment Productivity and the Minimum, Living and Mobile Wage: Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. National Council for Administration, Enforcement and Control of Social InclusionRelated Family Law: Norberto C. Peruzzotti - ABA
Annual Report | 2002
Commission for the Simplification of Hiring Procedures: Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. Sergio Scattolini - Banco Río de la Plata S.A. Jorge Stange - BBVA Banco Francés S.A. Mixed Three-Party Commission created by Decree No. 1096/00: Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. Safety and Hygiene and Work Risks Commission: Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. M. Cristina Ehbrecht - ABA Jorge Severino - ABA International Affairs Commission: Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. M. Cristina Ehbrecht - ABA Jorge Severino - ABA Unregistered Work Commission: Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. M. Cristina Ehbrecht - ABA Jorge Severino - ABA Employment Policy Commission: Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. M. Cristina Ehbrecht - ABA Jorge Severino - ABA Conflicts Prevention and Follow-Up Commission: Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. M. Cristina Ehbrecht - ABA Jorge Severino - ABA Training Commission Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. M. Cristina Ehbrecht - ABA Jorge Severino - ABA Permanent Advisory Committee for Labour Risk Law: Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. (Technical Alternate) Database Unique System (UASUBD) Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. Sergio Scattolini - Banco Río de la Plata S.A.
Annual Report | 2002
PRODUCTIVE SOCIAL LABOUR CONCILIATION TABLE Commission of Labour Relations and Companies in Crisis Carlos J. Melián - Banco de Galicia y Buenos Aires S.A.(Member) Enrique Eckert - HSBC Bank Argentina S.A. (Alternate Member) Commission of Social Economy, Microbusiness and Local Development Hernán Caballero - Banco Río de la Plata S.A. (Member) Alberto Díaz - BankBoston N.A. (Alternate Member) Commission of Social Security Daniel Agudo - BBVA Banco Francés S.A. (Member) Jorge Severino - ABA (Alternate Member) DIALOGUE TABLE FOR DECENT WORK PROMOTION Income Policy Commission Carlos J. Melián- Banco de Galicia y Buenos Aires S.A. (Member) M. Cristina Ehbrecht - ABA Working Hours Commission Sergio Scattolini - Banco Río de la Plata S.A. Jorge Severino - ABA Non-registered Employment Commission Daniel Agudo - BBVA Banco Francés S.A. Commission for Protection against Unemployment Santiago Battle - BankBoston N.A. INTERNATIONAL LABOUR ORGANIZATION Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. (Entrepeneur Representative) National Commission of Three-party Consultation for Application of International Labour Standards Carlos J. Melián - Banco de Galicia y Buenos Aires S.A. (Member) Santiago Battle - BankBoston N.A. (Alternate Member) ARGENTINE UNION OF SERVICES ENTITIES st Norberto C. Peruzzotti - ABA (1 Vice President )
(1) (2)
Until 5.9.02 Until 3.3.02
Annual Report | 2002
PRESIDENT'S LETTER During 2002, the country underwent one of its deepest crises ever. Its consequences affected every aspect of national life and, at the economic level, only a few sectors could benefit from it. Most people have been prejudiced by their assets losing value and the shrinking economy arising from uncertainty, as well as the subsequent capital outflow, which took place mainly during the first months of the year. Towards the end of 2001, ABA, together with other business entities, warned through a newspaper article about the difficulties that would arise if necessary measures were not taken to guarantee the effectiveness of institutions and essential rules that must govern the economic life of the country. These difficulties were enhanced by measures that, far from providing certainty, ended up provoking enormous income and wealth transfers, increasing distrust and broadening the impact from the social crisis. In the specific case of the financial sector, damages were huge and extended over all sectors, financial, equity and institutional. Banks incurred public debt default, noncompliance with private debtors and compulsory pesification of their reserves and other own liquid assets. Additionally, they had to face loss arising from credit pesification at a much lower parity to that established for conversion of deposits and other obligations - the renowned asymmetric pesification -, desindexing of most of their credits, payment of judicial injunctions (Amparos) and a state of affairs that encouraged debtors to incur noncompliance of their debts, even when they were in a condition to pay them. The most significant damage, however, exceeds the interests of the banking sector and affects the society as a whole. Deposit rescheduling and compulsive pesification, plus the discredit campaign that took place some time ago, coupled with the use of the financial system to distribute subsidies to some economic sectors, created general distrust and disgust of savers and the society towards banks. As it is known, trust is an asset that takes years to build and just minutes to destroy. The situation has improved during the last months. Exchange and monetary stability is boosting slow return of deposits. Banks started recovering deposits and measures were taken to restore the system's solvency and liquidity. Some of these initiatives would make possible that, during years to come, depositors whose deposits were pesified by governmental provision may recover them at their original value. Other measures made possible for savers to immediately recover availability of rescheduled deposits and for banks to start partially and gradually recovering damages caused by the systematic asymmetric treatment imposed by the Government on banking assets and liabilities. ABA publicly supported any and all initiatives that it understood to contribute to normalize the country's financial activity. Likewise, it backed voluntary suspension of mortgage foreclosures in order to eliminate the political approach permanently used at handling these initiatives, and to contribute to the solution of those cases that, although affected by the crisis, were still willing to pay. In spite of the improvements, the situation is still far from being normal. There is still a significant challenge to solve some pending issues. Different from other economic sectors, banks suffered additional loss as a consequence from their assets and liabilities being given an asymmetric treatment by the government. The remedy of this equity damage is broadly still pending. This is not only appropriate, but it also constitutes an essential condition for restoration of the system's equity and financial solvency.
Annual Report | 2002
In addition, to normalize the financial system it is necessary to recompose the right of ownership and restore legal certainty through measures supported by Judges and viable both from the fiscal and the entities' solvency viewpoint. Finally, it is essential that credit be restored. The practice of healthy policies is an essential condition, but it is not enough. Establishing stable and credible playing rules at the financial and credit levels, and at the same time reestablishing legal certainty and the value of contracts and property, is as important as macroeconomic policy. Only thus credit will be restored and, with it, the possibility to grow. Then, it remains that adequate policies and incentives be established so that banks recapitalize and recover the liquidity and solvency required by any healthy financial system and growing economy. It will take a lot of time and effort to reconstruct trust in banks, but it is a task that should be assumed as soon as possible. Otherwise, national savings will take long to return to the banks and credit will be expensive and scarce, as those times when one would have to save all life to purchase a home, a car or domestic appliances, because there were no mortgages, pledges or personal credits, and the country did not grow because there was no way to finance investment. Next presidential elections will be a big opportunity to advance in this path. The financial system's infrastructure is intact and is capable of restoring credit. The new government has the responsibility to consolidate this process.
Mario Vicens President Argentine Bankers Association
Annual Report | 2002
Index Chapter 1: Evolution of Argentine Economy.....................................................................1 Introduction ...........................................................................................................................................1 Public Emergency Act and Rescheduling of Deposits......................................................................1 Pesification, Creation of CER and First Deposit Exchange (Canje) Attempt .................................3 Canje I ......................................................................................................................................................4 Changes to the Bankruptcy and Insolvency Act.................................................................................6 Other Measures......................................................................................................................................7 Canje II.....................................................................................................................................................7 Act 25.713 and CER Application Exemptions...................................................................................8 Judicial Injunctions (Amparos) ..............................................................................................................9 Monetary and Exchange Policy..........................................................................................................10 LEBAC as Monetary Policy Instrument ...........................................................................................12 Monetary and Exchange Situation Towards Year-End ...................................................................14 Public Debt...........................................................................................................................................15 Macroeconomic Context....................................................................................................................17 The Agreement with the IMF.............................................................................................................18
Chapter 2: Monetary Evolution ................................................................................................22 Evolution of Deposits ........................................................................................................................22 Loans Situation ....................................................................................................................................23 Table 1 to 13..........................................................................................................................................28
Chapter 3: Financial System ........................................................................................................41 Banking Level of Activity ...................................................................................................................41 Equity Structure and Effects of the Economic Measures ..............................................................41 Table 14 to 24 .......................................................................................................................................44
Appendix...................................................................................................................................................55 Main Banking, Exchange and Financing Policies.............................................................................55 Table 25 to 26 .......................................................................................................................................93
Annual Report | 2002
Chapter 1: Evolution of Argentine Economy Introduction In December 2001, amidst a profound confidence crisis and social tension atmosphere, the President Fernando de la Rúa resigned and was temporarily replaced by Adolfo Rodríguez Saá, who, up to that moment, had been the governor of the Province of San Luis. A week later, Rodriguez Saá also resigned from office and the Legislature appointed Eduardo Duhalde President of the Nation, who at that time was National Senator. President Duhalde appointed Jorge Remes Lenicov Minister of Economy, while the Central Bank was presided over by Vice President Mario Blejer after the resignation of its President Roque Maccarone. At the end of April, Roberto Lavagna took on as new Minister of Economy upon Remes Lenicov's resignation. As a result of Blejer's resignation, Aldo Pignanelli, until then Vice President of the BCRA, assumed the Presidency of said Institution at the end of June. In turn, at the beginning of December Pignanelli submitted his resignation, being replaced by Alfonso Prat-Gay.
Public Emergency Act and Rescheduling of Deposits Economic decisions made during December 2001 had strongly affected market behavior, mainly at the financial level. At the beginning of the month, De la Rúa administration announced Decree 1570/01, with the purpose of converting both financial assets and Peso-denominated transactions to US Dollars. At the same time, it provided for restrictions, which he announced would be temporary, on the conversion of cash deposits, the purchase of US Dollars and on the conduction of transactions abroad. Later, in the inauguration ceremony as President of the Nation before the National Congress, Rodriguez Saá formally declared Argentina was unable to pay its public debt. In January 2002, Duhalde Administration decided to introduce a drastic change in the economic policy course. For that purpose, a package of measures was created and then sent to the Congress for approval. Some days later, Act 25561 Public Emergency and Exchange System Amendment- was passed. The main economic measures set forth in this Act were the elimination of the exchange rate provided for by the Convertibility Act, the pesification of debts of less than US$ 100,000 at the exchange rate of 1 Peso per US Dollar, the granting to the Executive of the power to restructure deposit terms, the pesification of debts for loans originally granted in Pesos and then converted to US Dollars after 11/30/2001 by virtue of the (1) provisions of Decree 1570/01 , and the suspension, for 180 days, of dismissals for no cause, thus doubling severance payments (please refer to Subsection 1). Once this Act was passed, the Executive decided to restructure bank deposit maturities, both for fixed term deposits in Pesos and for all deposits in foreign currency. The rescheduling scheme set forth longer terms and more installments the higher the deposit amount, with later reimbursement of deposits in the case of foreign currency deposits. A maximum 7% nominal annual interest rate was also set for rescheduled deposits in Pesos and a maximum 2% nominal annual interest rate for those deposits originally denominated in foreign currency. A bank and exchange holiday was declared and extended until the new economic measures were disclosed. As soon as the bank holiday ended, people went to the institutions though, operatively, banks still did not have the regulations necessary to implement the amendments disclosed on previous days through Acts and Decrees. (1)
Decree 1570/01 provided for the restriction on cash withdrawals from bank accounts as of December 2001.
|1|
Annual Report | 2002
|2|
Annual Report | 2002
Both in the Economic Emergency Act as well as in the Resolutions of the Ministry of Economy that regulated it, pesification was provided for at the exchange rate of $1 per US Dollar only in the case of some debts. This generated pressures from the different groups affected by loans that should be settled at the exchange rate set by the free market, which increasingly moved away from the official exchange rate set at $1.40 per US Dollar. Some days later, the Central Bank provided for that debts in foreign currency could be settled at the exchange rate of $1.40 per US Dollar, this being a virtual pesification of loans, while deposits continued denominated in US Dollars. Given the situation, presidential promises stating that "who had deposited Dollars would receive Dollars" were fading as it was impossible to carry that out, because Dollars from deposits had been lent and a significant portion thereof had been converted to Pesos at the exchange rate of $1 per US Dollar. The gap originated when loans were converted to Pesos as deposits were maintained in US Dollars forced the government to adopt a series of measures aimed at rectifying this fact.
Pesification, Creation of CER and First Deposit Exchange (Canje) Attempt Therefore, certain measures were adopted, disclosed by means of Decree 214/02, which provided for as follows: a)
All debts were pesified at the exchange rate of $1 per US Dollar.
b)
Deposits were pesified at $1.40 per US Dollar.
c)
Both debts and deposits were adjusted to the Reference Stabilization Coefficient (CER), that is to say, the inflation of consumer prices of the previous month applied daily.
d)
Some loans, basically the ones that had been pesified by virtue of the Economic Emergency Act, were exempt from this adjustment.
e)
A bond was issued to compensate financial institutions.
f)
Holders of deposits of up to US$ 30,000 were given the possibility to choose between 10year bonds in US Dollars at a 2% annual rate with half-yearly amortizations as of 2005 or else at LIBOR + 1% rate with full amortization at maturity. They also had the possibility to (1) choose a 5-year bond in Pesos .
g)
All physical note holdings of financial institutions, as well as the accounts of such institutions with the BCRA, were pesified at $1.40 per US Dollar.
h)
Preliminary injunctions and judicial foreclosures were suspended for 180 days.
i)
Increase of the amount of the assistance granted by the Central Bank to financial institutions was permitted during the currency of the Economic Emergency Act.
(1)
Issue conditions of these suffered significant losses due to the conversion of bonds that would be given to financial institutions as compensation, were disclosed by means of Decree 494/02. Said Decree also included the general guidelines for the calculation of said compensation and the way in exchange of deposits for public bonds would be carried out.
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Annual Report | 2002
Financial institutions suffered significant losses due to the conversion of loans to Pesos at the exchange rate of $1 per US Dollar(1) while resources used for the financing of such loans were converted to Pesos at a rate of $1.40 per US Dollar (mainly deposits) or else kept in US Dollars (negotiable obligations and foreign lines of credit). These losses are estimated at approximately 10 billion Dollars. In view of the non-viability of the situation, the government included in this Decree the abovementioned option so that savers could voluntarily exchange their deposits for public bonds. By means of this exchange, deposit holders were offered the possibility to extend the maturity term of their holdings until 2012, but they were allowed to recover their deposits in US Dollars. However, the acceptance of this exchange among deposit holders was very scarce, therefore, no significant amounts were covered. At the same time, fund outflow from banks did not stop. Three main reasons caused the system's loss of liquidity: a) withdrawals of funds released pursuant to account limits in force; b) the use of rescheduled deposits for settlement of debts(2); and c) judicial injunctions (amparos). Preliminary injunctions had a considerable impact as they were paid at the exchange rate set by the free market or else in US Dollars, thus absorbing an important portion of the cash held by banks. This fund outflow was exhausting the available funds financial institutions had in order to face deposit returns, placing them again on the verge of collapse. Rumors asserted that a compulsive exchange of deposits for public bonds would be implemented what increased the deposit outflow from the financial system even more, leading to the declaration of a bank and exchange holiday that would later be extended for some days. The Executive had submitted Congress a bill to stop the outflow of funds due to judicial injunctions, and which provided for the possibility to give public bonds in exchange for deposits. Notwithstanding whether delivery of bonds was compulsive or optional, the proposal was not welcomed by the general public. In view of the delay of the Legislative to deal with these measures, the Minister of Economy, Jorge Remes Lenicov, resigned on April 23. Some days later, Congress passed Act 25587, also known as "Anti-outflow Act" (Ley Tap贸n), whose purpose was to stop the fund outflow caused by preliminary injunctions (except in those cases it could be evidenced there were enough reasons to put people's life, health or physical integrity at risk, or where the claimant was an individual of 75 years of age or older). Even though this Act was made effective immediately, it did not fulfill its purpose.
Canje I One month after expiration of the term set forth for the first deposit exchange, government announced a new series of measures. Decree 905/02 provided for a new deposit exchange, determined the compensation to be granted to financial institutions for the asymmetric pesification, established a freely available account system, and even allowed the raising of new deposits in foreign currency, as long as said funds were used to finance foreign trade transactions. Public bonds offered through Decree 905/02 were different from those offered in the previous exchange. Basically, three types of National Government Bonds (BODEN) were issued, as the case may be:
(1)
Later on, on mid-March, the Executive issued Decree 471/02 by means of which all obligations from the Public Sector, either National, Provincial or Municipal, denominated in foreign currency as at February 2002 and subject only to laws in force in Argentina, were converted to Pesos at the exchange rate of $1.40 per US Dollar, plus the adjustment to CER. (2)
It is worth mentioning that until 4/15/2002, the release of rescheduled deposits was allowed for certain specific purposes, such as the acquisition of real property, new automobiles and vessels.
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Annual Report | 2002
a)
BODEN 2012: denominated in US Dollars, accruing LIBOR interest rate payable semiannua lly. Principal is amortized annually as of mid-2005.
b)
BODEN 2007: denominated in Pesos, principal payable semiannually, at an annual 2% interest rate and adjusted to CER.
c)
BODEN 2005: denominated in US Dollars, amortized in three annual installments, accruing LIBOR rate on a semiannual basis. These bonds could be exchanged for rescheduled deposits held by individuals of 75 years of age or older, individuals who would have received funds as severance payment and individuals whose lives, health or physical integrity were at risk. These bonds could also be purchased by holders of deposits originally made in foreign currency with a rescheduled balance not exceeding $10,000.
Furthermore, holders of current accounts, savings accounts and other sight deposits could purchase BODEN 2012 and BODEN 2007, while individuals could also bid for BODEN 2005. Financial institutions had to issue "Rescheduled Deposit Certificates" (CEDROS) representing the amount of deposits not exchanged for the abovementioned public bonds. These private bonds started to quote in the public market, and they could be used to subscribe new shares and negotiable instruments and to settle loans in the same institution that issued the CEDRO. Meanwhile, BODEN could be used to purchase real property from the National State, to build new real property, to purchase new automobiles, including road, agricultural and industrial vehicles, to set up financial trusts for the financing of investment projects and, finally, to pay national taxes owed as at June 2001. Another important issue provided for by Decree 905/02 was the compensation to financial institutions for the asymmetric pesification between deposits and loans, which was made pursuant to balance sheets at the end of 2001. The compensation provided for in this decree only included asymmetric pesification, which at the end of the year was not completely implemented. In accordance with Government estimations included in the Technical Memorandum of Understanding enclosed with the Letter of Intent sent to the IMF on January 2003, the aggregate amount of these compensations would amount to 16.7 billion Pesos. In order to carry out the exchange for deposits, financial institutions had to purchase the bonds they would (1) give deposit holders. To purchase the new bonds, they had to deliver, in the form of direct exchange , the bonds they had received as compensation for the asymmetric pesification of loans and deposits and which were not used to cover their foreign obligations, and the public debt they have had since the start of the crisis, which, after having been declared in default, was unilaterally pesified and restructured by the Government by means of Decree 471/02. When BODEN 2% 2007 holding, guaranteed loan holdings delivered as compensation, and provincial debt instrument holdings accepted for the exchange set forth by Decree 1387/01 were not enough to purchase the bonds requested by deposit holders, banks would be granted secured advances from the Central Bank with the best financing of the private sector (2) held in their portfolio. Once the term expired, the so-called Canje I had an acceptance that reached an amount of 8 billion Pesos, from which almost 7 billion Pesos corresponded to rescheduled deposits and the rest, to offerings carried out with sight deposit funds. Pursuant to the information disclosed by the Ministry of Economy, approximately 25% of the rescheduled deposits were exchanged for BODEN.
(1) (2)
Pursuant to amendments introduced by Decree 1836/02 and Decree 2167/02. Later, institutions had to apply the remaining National Government Bonds 9% 2002 holdings (Decree 1836/02).
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Annual Report | 2002
Changes to the Bankruptcy and Insolvency Act (1)
In mid-February, Act 25563 -Bankruptcy and Insolvency Act- was passed. This Act set forth the production and credit emergency until December 10, 2003 and, among other things, provided for the suspension, for a 180-day period, of judicial and extrajudicial foreclosures and of petitions in bankruptcy. It was also determined that the Central Bank should eliminate restrictions on the granting of financing to individuals or legal persons subject to insolvency proceedings. One of the consequences of this was that the suspension of foreclosures affected the possibility to recover non-performing loans granted by the financial system, thus deteriorating a portion of the income financial institutions would use to face savers' deposit withdrawals. In May, Act 25589 was passed, which re-established, with some amendments, the possibility of third party salvage as last attempt to prevent some debtors from going bankrupt upon failure of the composition with creditors. This is aimed at protecting company operations without the need of winding-up, allowing individuals other than the debtor to purchase the debtor's share in such company (at market value) after having reached an agreement with creditors. This possibility had been repealed by the Act mentioned in the precedent paragraph. Later, in September, Congress passed Act 25640, which extended, for 90 days, the suspension of judicial foreclosures set forth in Act 25589. Upon expiration of such term, institutions that constitute the financial system voluntarily agreed with the Executive the suspension, until February 2003, of foreclosures upon default in payment of loans granted. On the other side, in the Memorandum of Economic Policies sent to the IMF in January 2003, the Executive committed itself not to approve documents that would allow an involuntary suspension of creditors' rights.
(1)
This Act was partially amended by Decree 318/02.
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Annual Report | 2002
Other Measures In a new attempt to stop deposit outflow from the financial system, in particular those originated by judicial injunctions, the Executive issued, at the end of July, Decree 1316/02, by virtue of which the carrying out of preliminary injunctions was temporarily suspended for 120 days. However, this Decree did not stop the drain of funds caused by this type of legal actions. At the beginning of September, the Central Bank provided for that withdrawal limits not used within one month and accrued for the following month were subject to fund availability in accounts. That is to say, if the balance was less than the maximum withdrawal limit, the balance was transferred to the following month, not the hypothetical limit. This meant a virtual reduction of cash withdrawal limits. In addition, Decree 1657/02 provided for the suspension of tax payments with public debt instruments, and this reduced even more the little demand they had after the insolvency impact.
Canje II In this context, in mid-September the government decided to apply a new set of measures aimed at solving the financial system problem. Therefore, it launched "Canje II" by means of Decree 1836/02, which set forth as follows: a)
Holders of rescheduled deposit certificates (CEDROS) had the option to exchange their deposits for BODEN 2013 issued in US Dollars, together with an option to sell such bond coupons to the financial institution at $1.40 per US Dollar, adjusted to CER.
b)
Alternatively, such holders were given the opportunity to exchange the rescheduled balance for a Fixed Term Draft in Pesos issued by each financial institution, together with a Conversion Option to the currency of origin issued by the National State. Such Drafts were issued for a term of 10 years and a half and at a rate of $1.40 adjusted to CER, per US Dollar of the original deposit, while the option to convert to the currency of origin covered the difference between that value and the amount of the payment denominated in US Dollars.
The Decree also provided for that holders of rescheduled deposits of less than $7,000 could request the payment thereof, including the adjustment by the application of CER. Financial institutions could extend such reimbursement up to $10,000 if they did not need the Central Bank assistance to conduct such transaction. By means of this measure around 1.1 and 1.7 billion Pesos were released, affecting around 640,000 to 720,000 deposit holders. However, the adhesion to this exchange was scarce. For this reason, upon the expiration of the exchange term, the Ministry of Economy decided to extend it for 30 additional banking days, until December 2002. At the same time, it extended the weekly cash withdrawal amounts to $500 or to $2,000 monthly. At the end of November, the Ministry of Economy unexpectedly decided to eliminate the restrictions on cash deposit withdrawals from sight accounts ("Little corral" (corralito)). This provision did not have an immediate impact and no significant deposit losses were recorded due to the higher cash availability allowed by this measure. In December, upon expiration of the extension term of Canje II, the Ministry of Economy extended such term again for 90 additional calendar days, that is to say, until March 2003.
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Annual Report | 2002
Act 25.713 and CER Application Exemptions Inflationary expectations intensified by the Peso devaluation increased some debtors' fear regarding the impact inflation could have on loan installments adjusted to CER. In addition, even though several economic sectors were highly benefited by the devaluation and subsequent pesification of their debts, they took advantage of the circumstances in order to exert pressure for the nominal freezing of their debts. Consequently, in April, the government decided that a significant portion of bank loans duly pesified and subject to adjustment to CER basically retail inflation- should be adjusted to a new adjustment index created to such end by the INDEC to reflect salary evolution, which was denominated Salary Variation Coefficient (CVS). This measure provided for a new asymmetry in the financial system as banks have to index rescheduled deposits through the application of CER while they adjust an important number of loans to CVS. During 2002, CVS did not vary even though some salary increases had been recorded, while CER increased 40.5%. Thus, the introduction of asymmetric indexing generated an additional loss of around 3.8 billion Pesos, as it was acknowledged by the Government in the Technical Memorandum of Understanding enclosed with the Letter of Intent submitted to the IMF. This measure will continue bringing on additional losses to the financial system from now on as long as CER variation and the financial cost of deposits continue to exceed the salary variation reflected by the CVS. At the beginning of 2003, Act 25.713 was enacted, which had been passed by Congress at the end of November 2002. This Act specified exemptions to the adjustment of loans according to CER or CVS. The treatment of the different cases may be summarized as follows: a)
Mortgage loans up to U$S 250,000, personal loans up to U$S 12,000 and pledge loans up to U$S 30,000 will be adjusted to CVS as of 10/1/2002.
b)
All debtors with financing of less than $100,000 as of 2/3/2002 will be exempt from the adjustment to CER until 9/30/2002.
c)
Debtors whose financing as of 2/3/2002, in the aggregate financial system, do not exceed theamount of $400,000, will be able to capitalize the amount corresponding to the adjustment to CER from February until September, being the installments recalculated in order not to exceed the amount paid up to that moment.
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Annual Report | 2002
Judicial Injunctions The increase in the number of self-fulfillment preliminary injunctions recorded as of March 2002 absorbed an important amount of the financial system's liquidity. Even though Government provided for several measures to stop execution of this type of measures, judicial injunctions continued affecting bank liquidity reserves. During 2002, financial institutions returned deposits for a total of 3.6 billion Dollars on this account, having paid an equivalent of 11.5 billion Pesos. This amount was distributed among 144,000 cases that had to be paid. After deposits were pesified pursuant to Decree 214/02, these deposits paid due to preliminary injunctions represented about 5 billion Pesos, and the adjustment to CER up to the time they were repaid, added around 1.1 billion Pesos more. The banks paid the difference between this figure and what was really reimbursed, and they have not been compensated yet. The loss exclusively on account of judicial injunctions paid during 2002 amounted to 5.4 billion Pesos.
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Annual Report | 2002
Monetary and Exchange Policy After having devaluated, a system with both an official and a free exchange rate was implemented. While the former was fixed at $1.40 per US Dollar, the latter was determined by the market. As soon as the exchange rate set by the Convertibility Act was left without effect, the exchange rate of the free market exceeded the rate set in the official market due to a considerable increase in foreign currency demand. Very different quotations were recorded among different financial institutions, with a marked difference between the buying and selling rates. The gap between the official exchange rate and the free market rate was widening fast. The Central Bank was barely taking any intervention and the reserves allocated to try to reduce foreign currency demand were not sufficient to control the currency value. This led to the unification of the exchange market as of February 11. At that time, the exchange rate in the free market was already around $1.8 per US Dollar. In this sense, money supply was playing a very important role, as much as the high foreign currency demand, whose purpose was to maintain the value of savings. When the BCRA's Charter was amended, restrictions limiting the BCRA's capacity to grant assistance to financial institutions were eliminated and they expressly forbade the granting of loans to the national government, except through the purchase of negotiable instruments at market value. From that moment, the Central Bank started to rapidly increase the money supply. One of the major sources of money issue was rediscounts granted to financial institutions to assist them to face deposit withdrawals. These deposit withdrawals were largely increased by the submission of judicial injunctions, which banks were bound to pay in foreign currency or in Pesos at the exchange rate of the free market. Another significant source of currency issue was the financing granted by the Central Bank to the Treasury. This level of monetary expansion, together with the effect of devaluation, did not take long to have an impact on the price level of economy. Although in the 2002 budget a 15% inflation on consumer prices was expected for the entire year, this target was quickly exceeded in the first months. At the end of April, retail prices had increased 21%, strongly pushed by the price of goods, while the price of services had not shown significant changes. Meanwhile, wholesale prices increased 61.3% during that same period, mainly due to the influence of the exchange rate on tradeable goods. The Central Bank provided for exchange controls and restrictions on transfers abroad, and this helped it recover part of the foreign currency it used to calm exchange market demand. Subsequent controls included from the reduction of export settlement terms to restrictions on foreign currency purchases by individuals or legal persons. It was also set forth that a significant amount of exports should be settled directly by the Central Bank. The extent of deposit outflow from the financial system highly increased institutions' liquidity needs during the first half of the year, and the large number of judicial injunctions filed contributed to worsen this situation. For such reasons, the Central Bank increased the assistance granted to financial institutions regarding rediscounts and iliquidity advances. However, since the recovery of deposits shown in the second semester, institutions' needs decreased considerably; therefore, the assistance granted by the Central Bank diminished. During 2002, the credit assistance the BCRA granted to the financial system increased around 18.9 billion Pesos, taking into consideration both the new loans granted to those institutions and capitalized interest. It is worth mentioning that active transfers conducted by institutions with the Central Bank decreased around 4.9 billion during that year, most of which were converted to rediscounts or iliquidity advances. This means that the net assistance granted by the BCRA to the financial system during 2002 |10|
Annual Report | 2002
amounted to between 8 and 10 billion Pesos. During the second half of the year, the value of the Peso was stabilized and it improved as a consequence of the increase in foreign currency settlements arising from exports withheld during the first half of the year and of a higher demand of financial assets in Pesos attracted by high interest rates offered by banks to protect their liquidity. The exchange rate remained around $3.50 per US Dollar, what, undoubtedly, contributed to the gradual recovery of fixed term placements and of the financial system liquidity, thus being unnecessary to grant more rediscounts to institutions. On the other hand, temporary advances from the Central Bank to the National Government reached 3.7 billion Pesos during 2002, concentrating 700 million Pesos between February and April, and the rest during the last months of the year. From the abovementioned money issue, around 7.8 billion Pesos increased currency circulation, while about 4.5 billion Pesos were deposited in the Central Bank to comply with the minimum cash requirements. By means of LEBAC placement, around 3.2 billion Pesos could be absorbed, net of interest paid on this account. Finally, it is estimated that around 2.5 billion Pesos were absorbed by the interventions of the Central Bank in the exchange market. Even though reserves were used to absorb around 11.2 billion Pesos during the first part of the year, since September the impact of settlements made by exporters was higher than foreign currency demand, reason for which around 8.7 billion Pesos were monetized on this account.
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Annual Report | 2002
LEBAC as Monetary Policy Instrument In mid-March, the Central Bank's Charter was amended again, allowing the BCRA to issue bonds or securities. Therefore, the Central Bank started to make offerings of BCRA Bills (LEBAC), an instrument used as a currency regulation tool. This mechanism provided for the absorption of monetary base to reduce the possible effect the issue could have on price level. LEBAC had to be purchased in cash or with freely available funds. These bills offered a reference lending rate, what constituted a market need due to the shortage of fixed term deposits. The first offerings were made up of 7-day drafts, which then extended to 14 day drafts and in late March the first 30-day placement of a Dollar-denominated bill was made. However, it was in the second half of August that the average terms of these Bills issues started to extend significantly. Towards the end of August some issues of LEBAC in Pesos adjusted to CER were made, although the current stock did not exceed 40 million Pesos due to the scarce demand. Since mid-year, the stock of LEBAC in Dollars was around 700 million Pesos and an important growth of Peso-denominated drafts was recorded. The exchange rate stability during said period had an influence on this event, and this markedly reduced the demand of Dollar-denominated drafts. At the end of 2002, the stock of LEBAC was about 3.7 billion Pesos, 82% of which corresponded to bills in Pesos. At that time, the weighted average term exceeded 100 days for bills in Pesos, while the weighted average term for foreign currency-denominated drafts was only 8 days and a half. The average rates of Peso-denominated LEBAC reached an annual 125% maximum in mid-July, 2002, but then decreased as current amounts increased, until reaching approximately 50% in September. A huge difference was observed in the rates of return of bills, as the average cost of the stock in Pesos increased to an annual 42%, while for Dollar-denominated bills the interest rate was 0%. The reason for the latter was that the demand of Dollar-denominated LEBAC was concentrated in some financial institutions that needed Dollar-denominated instruments to cover their foreign exchange positions, as foreign exchange holdings were limited by the Central Bank. Even though LEBAC issues allow to make a currency absorption that cushions the impact of the money issue, they also have a secondary effect as the interest that must be paid in order to place those bills generate a quasi-fiscal deficit. During 2002, quasi-fiscal deficit generated on this account amounted to 572 million Pesos.
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Annual Report | 2002
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Annual Report | 2002
Monetary and Exchange Situation towards Year-End A lower foreign exchange demand was recorded since mid-December, and this had an impact on the decreasing trend, thus taking the exchange rate under that mean value. The Central Bank started to release some of the restrictions imposed on the foreign exchange market to maintain the exchange rate within the proposed guidelines. The monthly Dollar purchase limits per person were raised from US$ 100,000 to US$ 150,000, the minimum amount for exports that should be settled in the Central Bank was also increased, leaving a higher margin so that settlements could be carried out in the free market, and the amounts banks could have in their foreign currency portfolios increased to 8% (1) of the Computable Equity (RPC). The Central Bank even ceased to take part in the retail market, suspending the transactions financial institutions conducted on behalf of the Central Bank. It is worth mentioning that at the time of the devaluation, the Central Bank's liquid reserves amounted to 14.5 billion Dollars. Due to what was used in exchange interventions and in international public debt settlements, this amount was reduced to 9 billion Dollars in August. However, export settlements and the decrease in foreign exchange demand made it possible for the BCRA reserves to recover at the end of the year, reaching a total of 10.3 billion Dollars. (Refer to Table 7).
(1)
It increased to 10% in February 2003
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Annual Report | 2002
Public Debt At the end of 2001, the national public sector debt reached a total of 144 billion Dollars. Until the third quarter of the year, 14.4 billion BODEN were issued, 5.4 billion of which were used for the deposit exchange and 9 billion were given to banks as compensation and hedge. It is worth mentioning that BODEN issued to settle bank deposits within the framework of Canje I and Canje II did not represent an increase of the public debt as banks bought said instruments by means of an exchange for debt securities previously pesified and then dollarized again for that purpose. As regards exchanges, debt would only temporarily increase in the case any bank did not have the securities needed to purchase the BODEN to be given to deposit holders and would have to resort to the BCRA advances. On the contrary, public debt increases due to the compensation Government has to pay to banks for the losses generated by the asymmetric pesification. A portion of said compensation was settled with Dollar-denominated debt instruments up to the concurrence of institutions' foreign liabilities- while for the rest of such compensation, banks received Peso-denominated BODEN adjusted to CER. In addition, a significant reduction of almost 30 billion Dollars was noticed due to the original pesification of debt subject to Argentine law, what was partially offset by the increase generated due to the adjustment pursuant to the evolution of CER, which generated a 3.4 billion increase. Also, a 2.8 billion decrease was recorded as a consequence of amortization payments, mainly to multilateral credit agencies.
Taking other variations into account, the total national public sector debt was reduced to 130 billion Dollars during the first nine months of 2002. However, even though a decrease denominated in foreign currency was recorded, the debt raised to 146% in terms of the GDP. In turn, the average term of the debt is approximately five years and a half, including interest and arrears. |15|
Annual Report | 2002
Furthermore, another characteristic is that the average rate is 6%. From the total national public sector debt, 50% corresponds to public bonds, while 27% are obligations to international credit agencies and 16% corresponds to guaranteed loans. As of September 30, 2002, the amount of the debt with arrears in payment was 8.7 billion Dollars, 5.7 billion of which corresponded to principal and the rest to interest deferment. However, if Tax Credit Certificates are deducted, arrears are reduced to 7.4 billion Dollars.
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Annual Report | 2002
Macroeconomic Context At the end of year 2001, Argentine economy recorded a 10.5% GDP fall, strongly influenced by the 4.9% setback recorded in the last quarter of the year. The change in the economic course, characterized by devaluation, deposit rescheduling and pesification, affected the real sector behavior, thus producing a 16.3% GDP contraction during the first quarter of the year. The highest fall was recorded in the goods producing sectors, reaching 19.4%, while services producing sectors suffered a 13.3% contraction. This led the GDP level to levels similar to those recorded in the first quarter of 1993. During the second and third quarters, falls reduced to 13.5% and 10.1%, respectively, in comparison to the same period of the previous year. In this way, taking into account the information available for the first nine months of the year, Argentine GDP fell 13.3% in comparison to the same period of the previous year. The fall in private consumption stands out, which reached 16.4%, while public consumption only decreased 6.1%. The effect of events that took place during the year on investment is very important, which led to a 42% investment contraction. In the same period, the balance of payments showed a 6.7 billion US Dollars surplus in the current account and a 10.5 billion US Dollars deficit in the principal account. Notwithstanding the devaluation carried out during 2002, exports amounted to a total of 25.3 billion US Dollars, what implied a 5% setback in comparison to the previous year. However, impact was plainly shown in the imports level, which amounted to 9 billion US Dollars, that is to say, a 56% fall. This caused an important increase in the trade exchange surplus, of more than 16.3 billion US Dollars. This situation was influenced by the capital outflow level of the Argentine economy. As it can be observed in the capital account of the balance of payments, the non-financial private sector transferred 10.3 billion US Dollars abroad. It is worth mentioning that, in practice, this does not imply a physical outflow of funds, but any savings in foreign currency (whether US Dollars, Euros, Yens, Pounds) kept out of the economic circuit is considered a capital outflow and has the same effect. The aforementioned economic contraction also affected the labor market. The unemployment level showed a slight reduction in October in comparison to the previous year, reaching 17.8%. However, if the incidence of the Heads of Household Plan (Plan Jefas y Jefes de Hogar) is eliminated, this measure reached 23.6%, higher than the 18.3% recorded during the previous year. Pressure exerted by the devaluation of the Peso and the monetary expansion was partly offset by the limits imposed on domestic price adjustments due to recession and unemployment. Even though it is very questionable from several points of view and, particularly, from a mid-term economic perspective, it should be accepted that utilities rate freezing also had an influence to limit devaluation impact on inflation. In fact, the general consumer price level increased 41% until the end of the year, while wholesale prices amounted to a 118% inflation.
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Annual Report | 2002
With the purpose of encouraging goods consumption, on November 18, 2002, the VAT rate was reduced from 21% to 19%, effective until January 17, 2003. In fact, this measure was not extended when expired because it did not improve people's consumption and caused certain decrease in tax collection.
The Agreement with the IMF In January 2003, the government sent a Letter of Intent to the IMF, requesting a Stand-by Agreement for the credit tranches of the loan granted by said Agency, until August 2003, for approximately 3 billion US Dollars. These resources would be used to refinance the maturities of Argentine obligations to the IMF. The Memorandum of Economic Policies enclosed with the Letter of Intent included the general guidelines of a short-term transition program, based upon the following: a)
The 2003 Budget, aimed at maintaining tax deficit under control.
b)
Implementation of bilateral agreements between national and provincial governments.
c)
A monetary program geared towards keeping inflation at low levels.
d)
Preparatory steps of structural measures necessary to strengthen theal fiscal situation in the mid-term.
e)
Advance towards debt restructuring.
f)
A strategy to free the banking system from any outstanding debts.
g)
Assure full respect of creditors' property rights, re-establishing legal security and moving forward on corporate restructuring. |18|
Annual Report | 2002
The macroeconomic framework in which the government thinks these measures will be applied is characterized by a 2 to 3% GDP growth, a 35% consumer price inflation and a current account surplus of around 6.5 billion US Dollars. Likewise, government would try to keep international reserves at the same level, assuming the refinancing of maturities until August 2003. One of the goals is to attain a consolidated public sector primary surplus (cash base) of 2.5% of the GDP, 2.1% of which is estimated to correspond to the national government and the rest to provincial and municipal governments. Public revenues would be strengthened by the elimination of competitivity plans and some tax exemptions. As regards expenses, a limit of 45.9 billion Pesos was set, 27.9 billion of which correspond to staff salaries and pension expenses. The 13%-cutback salary reimbursement would be made with bonds not amortized during 2003. Furthermore, resources would be provided to meet the service of: a) the debt and other bonds from Canje I; b) compensation bonds issued for asymmetric pesification, for asymmetric indexing between assets and liabilities and for losses as a consequence of judicial injunctions; c) obligations to international financial agencies. The Central Bank would only transfer to the Treasury realized profits for up to 1 billion Pesos, limiting government credit pursuant to the provisions set forth in the monetary program. During the second revision, a strategy for the redemption of quasi-currencies would be agreed upon. The expenses of the social containment network would be doubled, reaching 1.2% of the GDP, mainly with the Plan for Unemployed Heads of Household, improving the controls over its implementation. The Central Bank would prohibit banks to grant loans with federal co-participation security to the provinces and municipalities. As regards the public debt, its increase would be limited to 105 billion Pesos during the first semester of the year, amounting to a total of 612 billion Pesos. The proposed limit includes 34 billion Pesos on account of provincial debt, 8 billion Pesos on account of acknowledgement of previous obligations, 17 billion Pesos on account of compensation to the financial system and 27 billion Pesos for the effect of inflation on indexed debts. The Central Bank would try to make the monetary base, including quasi-currencies, reach, at the end of August, the same level reached at the end of December 2002, that is to say, 36.6 billion Pesos. Exchange rate flexibility would be maintained, but with limited interventions. The monetary policy would be mainly developed through LEBAC offerings. This program implied foreign financing for 11.6 billion US Dollars for the first eight months of the year. It is expected that such resources would be obtained as follows: 2.9 billion from new disbursements from the IMF, 3.7 billion from refinancing from said Agency, 4.4 billion from refinancing from the World Bank and from the Inter-American Development Bank and deferment of maturities for 700 million from the Paris Club. Exchange restrictions and controls would be eliminated, allowing more freedom to make transfers abroad, in particular those transfers related to debt settlement. In the mid-term, a 3.5% GDP increase as of 2004 is expected, with 5% inflation and a real exchange rate appreciation, though below the values prior to the crisis.
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Annual Report | 2002
As regards the banking area, a Specialized Supervision Management aimed at restructuring institutions would be created, the Financial Institutions Act would be amended to favor these processes, a temporary system for the protection of deposit holders of closed banks would be created, as well as mechanisms to compensate financial institutions for the losses originated due to asymmetric indexing and judicial injunctions. Furthermore, a clear rediscount policy would be set so that no institutions would excessively depend on this tool. International technical support would be requested to reform the major public banks, Banco Naci贸n, Provincia, and Ciudad de Buenos Aires. Meanwhile, the loan capacity of Banco Naci贸n and Banco Provincia would be limited, requiring a minimum 50% co-financing for loans exceeding one million Pesos. The independence of the Central Bank would be strengthened. In such submission, it was also specified that no involuntary measures limiting enforceability of creditors' rights would be taken. Public funds would not be used to secure corporate sector exchange risk or to subsidize corporate debts, providing an equal treatment both to creditors and debtors.
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Annual Report | 2002
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Annual Report | 2002
Chapter 2: Monetary Evolution Evolution of Deposits At the beginning of January 2002, when deposit rescheduling took place, there were deposits for 18.5 billion Pesos and 46.5 billion Dollars in the financial system. Both deposit rescheduling as well as the devaluation of the Peso increased the level of distrust, contributing to enlarge the great uncertainty environment, thus causing a higher deposit loss than that recorded during the last months of the year 2001. During the first two months of 2002, an average 2.2 billion Pesos in deposits were lost monthly. After deposit pesification and in view of the proliferation of judicial injunctions that should be reimbursed in foreign currency or in Pesos at the exchange rate set by the free market, losses speeded up reaching 5.3 billion Pesos in March and 5.9 billion Pesos in May. This fund outflow absorbed an important amount of the financial institutions' liquidity, and forced the government to implement measures such as the exchange of deposits for public bonds. As of March, the Central Bank authorized financial institutions to raise fixed term deposits with a minimum 7-day term as long as they were made with freely available funds, but during the first months, this mechanism was not a major means of fund raising. In addition, as LEBAC absorbed part of the funds financial institutions were losing as deposits, interest rates paid on fixed term placements were raised with the purpose of keeping customers. In May, June and July, the deposit outflow diminished, even though it continued to be high. Until mid-July, the deposit decrease had reached a total of 22.1 billion Pesos. However, this trend changed as of that time, when private sector deposits started to recover.
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The high market interest rates, together with the stability the exchange rate had shown, were factors that contributed to this recovery. The increase recorded during the first months in which term placements began to raise also has an accounting explanation, as deposits paid due to preliminary injunctions were valued at $1.40 per US Dollar, while they were paid at the exchange rate set by the free market, which was much higher than that value. Due to the fact that interest rates attracted some customers to keep at least a portion of their released funds in financial institutions, the total amount of deposits raised. Even though for the whole year total deposits decreased 17.3 billion Pesos(1), as of the time recovery started in mid-July, they increased in 4.8 billion Pesos, amounting to 68.8 billion Pesos at the end of the year, which amount was distributed as shown in Chart 1.
Loans Situation At the end of 2001, loans to the non-financial private sector amounted to 51 billion Pesos, 36 billion of which were denominated in foreign currency. During 2002, this amount diminished for various reasons. First, the increasing inflation recorded during the first months of the year made some debtors fear it would be very difficult to pay their loans, what led them to settle their obligations in advance. In addition, the pesification of loans originally granted in foreign currency, at one Peso per US Dollar, together with the exchange rate increase, made the advance settlement of said obligations very convenient for those who had savings in foreign currency, thus operating as a loan liquidation. Lastly, as there were neither resources to be lent nor a clear legal context as regards maintenance of prevailing conditions, no new loans were granted. Furthermore, it is worth pointing out the effort financial institutions had to make to recover the liquidity level, both to comply with the minimum cash requirements and for the sake of prudence, granting facilities and certain benefits to their customers. All this led to the reduction of the balance of private sector loans granted by the financial system to 31 billion Pesos at the end of 2002, that is to say, a 38.5% decrease.
(1)
Taking into consideration deposits valued at $1.40 per US Dollar at the time of rescheduling.
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It is worth mentioning that, apart from the pesification of foreign currency financing, interest rates also fell considerably. In such respect, when the Central Bank set forth the procedure to adjust loans originally granted in foreign currency, it also provided for a maximum interest rate for said loans, which depended on the type of debtor and the guarantee.
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Recovery of deposits evidenced in the second half of the year led some financial institutions to offer short-term personal loans. Likewise, restrictions imposed by the Central Bank on loan granting are part of the problem. These conditions are mainly related to the amount of financial assistance for iliquidity reasons that BCRA would have granted to the financial institution, thus limiting its loan capacity, which is related to the assistance granted. However, even in the absence of those restrictions, the lack of mid- and long-term funds produces a lack of loan resources to allow the financing of loans for longer terms. Mortgage loans were financed with funds generated by the issue of commercial papers or through foreign lines of credit, which have a longer term than fixed term deposits and are less volatile than them. The macroeconomic context is essential for the loan market development, and to have a regulatory and legal framework that guarantees the maintenance of the conditions agreed between the parties.
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Chapter 3: Financial System Banking Level of Activity The banking activity reduction was reflected not only in the substantial decrease of deposits and loans, but also in the disappearance of almost all the income sources of financial institutions. Loans were pesified at the exchange rate of $1 per US Dollar while deposits were pesified at $1.40 per US Dollar plus the adjustment to CER, reason for which resources recovered by the settlement of loans were not sufficient to face deposit withdrawals. Loans were recalculated using interest rates lower than market rates and, what is more important, even lower than those paid for fixed term deposits. Likewise, the suspension of payments declared by the National State eliminated income from amortizations of the public sector securities and loans and the possible liquidity that could have been obtained from the settlement of any of those documents in the secondary market, even though banks would had to pay the difference in value. In addition, individuals opened an important number of accounts in December 2001 to increase cash withdrawal limits. By virtue of what was provided for by Decree 1570/02, financial institutions could neither charge for the maintenance of such accounts, nor receive commissions on bank transfers, what meant having to face higher administration costs without receiving a corresponding income. (1)
Foreign currency holdings financial institutions could hold in their portfolios were also reduced, and it was decided that most exports should be settled directly to the Central Bank, thus reducing another source of income. Therefore, the continuous amendment of rules and regulations and the elimination of most income sources made certain international financial institutions -two of which had a considerable number of branches- make the decision to leave the country, as they considered the decrease in the sector's level of activity would not be reversed soon in the following years, apart from having to face an environment that was unfavorable to foreign capital companies.
Equity Structure and Effects of Economic Measures The change in economic policy during 2002 generated important variations in financial institutions' equity structure. The devaluation of the Peso together with the asymmetric pesification caused significant bank decapitalization. In December 2001, bank institutions net worth amounted to 16.47 billion Pesos or US Dollars, while in December 2002 (last figure available) it amounted to 29.25 billion Pesos or the equivalent in US Dollars 7.9 billion US Dollars, that it to say that, in US Dollar terms, there was an approximate decrease of 50% in net worth. In December 2001, the financial system exposure to the public sector was less than 24% of total assets, including both public bonds held in the portfolio and loans granted to that sector. Due to the compensations granted for the difference in the exchange rate used for the pesification, this exposure reached almost 60% of financial assets in September 2002, taking into account that an important portion of these assets are recorded at their technical value (their market value is much lower). As regards loans granted to the private sector, a substantial reduction is observed due to settlements made during the year and to the fact that no new loans could be granted. Furthermore, the share within the total assets was reduced even more because said loans were converted to Pesos at the exchange rate of $1 per US Dollar and most of them are not adjusted to CER.
(1)
Even foreign currency de posits financial institutions held at the Central Bank for minimum cash requirements were converted to Pesos.
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As regards institutions' liabilities, two thirds of balance sheets at the end of 2001 corresponded to deposits. As it was already mentioned, important deposit outflows were recorded during 2002, particularly during the first half of the year. Even though a deposit reduction is observed when we consider the year 2002 in the aggregate, an increase is recorded in financial institutions' balance sheets as said deposits are valued at $1.40 per US Dollar originally deposited, while in December 2001 the exchange rate used was $1 per US Dollar. The increase in negotiable instruments and foreign lines of credit is very important as they continue being denominated in foreign currency, thus largely increasing their value in Pesos. Another important item in liabilities are obligations to the Central Bank on account of the increase in rediscounts and temporary advances on account of iliquidity, granted by the BCRA to financial institutions as financial assistance to face deposit withdrawals. To sum up, the increase recorded in financial institutions' assets is mainly due to the bonds they have received as compensation for the asymmetric pesification, which are recorded at their technical value. In liabilities, obligations that continue being denominated in foreign currency have increased due to the rise in the exchange rate. It is very important to emphasize the gap between currencies and updates in the institutions' balance sheets. Broadly speaking, there are 5 groups of different financial status summarized in the following table:
The different positions are unmatched and, due to the fact that this difference is very important in some groups, it puts the financial system at risks that cannot be easily covered. Furthermore, as assets in Pesos without indexing are less than liabilities in such condition, there is an additional cost because they mainly correspond to new deposits that have to be paid at the interest rate in force in the market. Even though this rate started to decrease, it is difficult to obtain assets with a similar return in order to be able to match them. |42|
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This means there are indexed assets with low interest rates being financed with liabilities adjusted to the interest rates in force in the market, exposing the financial system to new losses as the real interest rate is positive or increases. In addition, an exchange rate increase can cause important losses to the financial system. Even though the accounting record value of obligations is similar to the assets that remained denominated in foreign currency, an important portion of the latter corresponds to the hedging bond that is less liquid and which market value is less than the accounting record value. Also, there is an important term gap between assets and liabilities of financial institutions as a consequence of the successive economic measures. The terms set forth in the deposit rescheduling are considerably shorter than those of public bonds granted as compensation, apart from the extension caused by the suspension of payments declared by the State. In addition, the gap between adjustable assets and liabilities mentioned above (rate gap) increases the liquidity gap. While assets adjustable to CER capitalize the adjustment factor and only pay the applicable interest, accrued interest is credited to free rate liabilities, including the inflationary component implied in the interest rate. In the future, the liquidity gap shall continue increasing due to rescheduled deposit maturities or to CEDROS advanced payment. It is evident that the stability of this situation essentially depends upon the macroeconomic conditions incentive the renewal of fixed ter m deposits with longer terms on a systematic basis.
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APPENDIX Main Banking, Exchange and Financing Policies. Communication "A" 3418. LISOL - 1 - 369. (01.03.02) The Central Bank provided for that, to the effects of debtors rating for December 2001 and January 2002, financial institutions should increase the delinquency term allowed for levels 1 and 2 in 31 additional days, both for the commercial portfolio and the consumption portfolio. In turn, the criterion set forth in the above subsection should be applicable to debtors rated in category 2 included in the "Agreements to improve competitiveness and employment creation" (Decree 730/2001), that would have been granted refinancing in the term provided for in subsection 1.3 of Communication "A" 3285. Communication "A" 3419. LISOL - 1 - 370. (01.03.02) The Central Bank fixed a Minimum 25% cash requirement on the increase of obligations subject to that requirement and to minimum liquidity requirements regarding the balance as at 01.04.02, for the period between 01.07.02 and 01.31.02, additional to the 75% requirement on the increase of said obligations regarding the balance as at 11.30.02. This Circular Letter was left without effect by Communication "A" 3470. Communication "A" 3420. CIRMO - 3 - 12. (01.04.02) The Central Bank communicated that, as of 01.07.02, transactions with payment checks could only be carried out in pesos. Communication "A" 3421. RUNOR - 1 - 505. (01.08.02) The BCRA (Central Bank) provided for a bank holiday on January 7 and 8, 2002, maintaining the exchange holiday set forth on 01.04.02 effective. Communication "A" 3422. RUNOR - 1 - 506. (01.08.02) Through this Communication, the Central Bank extended, until and including 01.09.02, the bank and exchange holiday effective for January 7 and 8, 2002. Communication "A" 3424. RUNOR - 1 - 507. (01.09.02) The Central Bank extended the bank and exchange holiday provided for pursuant to the conditions set forth in Communications "A" 3421 and "A" 3422 until and including 01.10.02. |55|
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Communication "A" 3425. CAMEX - 1 - 322. (01.10.02) As of 01.11.02, the effectiveness of the Official and the Free Exchange Markets was provided for. The Central Bank set forth that financial institutions that regularly took part in international commerce transactions with the intervention of their correspondent foreign banks would be authorized to operate in the Official Market with their foreign currency holdings from the Free Exchange Market, being bound, at the end of each day's transactions, to buy or sell the net amount transacted in the Official Market to the Central Bank. The exchange rate for this market, which would be applicable to transactions carried out by institutions with the BCRA and with its customers, would be $1.4 per US Dollar. All transactions which were not adjusted or which were not authorized by the Central Bank to be conducted in the Official Market, would be conducted in the Free Exchange Market. The exchange rate would be determined by free offer and demand. Financial institutions and exchange offices authorized by the BCRA to conduct exchange transactions shall participate in this Market. This Communication was left without effect by Communication "A" 3471, which provided for that, as of 02.11.02, a Single Free Exchange Market would be in operation for all exchange transactions. Communication "A" 3426. OPASI - 2 - 279 and OPRAC - 1 - 515. (01.10.02) Taking into account what is set forth in Act 25,561 Public Emergency and Exchange System Amendment Act (Ley de Emergencia PĂşblica y Reforma del RĂŠgimen Cambiario), measures related to deposit rescheduling were adopted through Decree 71/02 and Resolution 6/02 by the Ministry of Economy. In such respect, limits for cash withdrawals and the currency to be used when issuing "counter" or "financial payment" checks related to judicial deposits or deposits between accounts in the same or in different institutions were modified, and provisions on deposit rescheduling, both in Pesos and in foreign currency were included. Communication "A" 3429. OPRAC - 1 - 516 and OPASI - 2 - 281. (01.11.02) The Central Bank regulated the scope of Act 25,561 by means of the conversion of active transactions to Pesos at the exchange rate of one Peso per US Dollar. In addition, the Central Bank provided for that balances from financing instrumented by means of credit cards corresponding to settlements whose maturity would take place as of 01.06.02, would be denominated and payable in Pesos provided that they corresponded to consumptions within the country. Consumptions made abroad, notwithstanding their date of origin, would be included in the holder's statement of account in the agreed currency. |56|
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Communication "A" 3433. OPRAC - 1 - 517. (01.14.02) The BCRA issued supplementary rules and regulations applicable to Act 25,561 regarding active transactions. In that sense, active transactions conducted in US Dollars after the issuance of Decree 1570/01 would be converted to Pesos (at the rate of 1 Peso per 1 US Dollar), maintaining the original conditions regarding their term. Interest rates should not be higher than the ones originally agreed, and, in the case of advances and overdrafts in current account, such rates should not exceed the ones in force as at 11.30.01 for peso-denominated transactions. Active transactions in US Dollars or in other foreign currencies neither included in the case above nor in subsection 1 of Communication "A" 3429, would be restructured taking into account both an extension of the maturity term equivalent to, at least, 30%, 20% or 10% of the remaining term, depending on whether they were transactions with a remaining term of up to 1 year, from 1 to 5 years or of more than 5 years, respectively, and a reduction of at least 33% of the interest rate originally agreed. Communication "A" 3439. CONAU - 1 - 414. (01.18.02) The BCRA provided for that, in order to draw up the monthly ledger balance as at 12.31.01, the communication by the Professional Economic Sciences Association of the City of Buenos Aires regarding the valuation of assets and liabilities in foreign currency at the exchange rate of one Peso per US Dollar, should be applied. Communication "A" 3442. OPASI - 2 - 283. (01.22.02) Pursuant to Decree 141/02 and to Resolution 18/02 of the Ministry of Economy, the rules and regulations on the reimbursement of non-rescheduled balances in foreign currency were adjusted. In such respect, the Central Bank provided for that cash withdrawals from accounts in foreign currency, with a U$S 500-limit, would be made effective in Pesos, using the official parity or the parity in force in the market in which transactions were conducted for conversion purposes. This Circular Letter was modified by Communication "A" 3467. Communication "A" 3443. OPASI - 2 - 284. (01.22.02) By virtue of what was provided for by Resolution 23/02 of the Ministr y of Economy, the Central Bank adjusted the rules governing conversion to Pesos of US Dollar-denominated checks of financial institutions, exchange transactions and release of rescheduled deposits. In such sense, it was provided for that institutions should be able to exchange counter checks, deferred checks and payment checks in Dollars, not made effective and which corresponded to movements against customer accounts carried out until and including 01.04.02, at the exchange rate of $1.40 per US Dollar. |57|
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Institutions could not sell foreign currency, gold or other precious metals in the free market, through debits to current accounts or savings accounts, as well as against delivery of issued checks or debit orders by means of transfer between accounts of the same or different institutions. Account holders could choose, at any time, to transfer up to $7,000 from the total rescheduled amount to current accounts or savings accounts in Pesos. Individuals and legal persons could request the release of amounts included in the rescheduled deposits related to: payment of salaries to employees that corresponded to January 2002 payroll or previous payrolls pending payment; payment of obligations in Pesos, of any nature whatsoever, to the State (whether National, provincial or municipal) and obligations related to social security; total or partial settlement of financing in foreign currency only with rescheduled balances in US Dollars within the same institution, even though customers were not the holders of the rescheduled deposits; total or partial settlement of financing in Pesos only with rescheduled balances in Pesos in the same institution or a different one, even though customers were not the holders of the rescheduled deposits; excluding payment of balances arising from credit card settlements. Finally, the Central Bank authorized the creation of fixed term deposits in Pesos with funds from current accounts and savings accounts in Pesos, for a minimum term of 30 days and at the rate agreed. Communication "A" 3446. OPASI - 2 - 285. (01.24.02) Exceptions to the deposit rescheduling system were set forth and releases of rescheduled deposits, subject to certain conditions, were admitted for deposits in fixed term accounts, current accounts and savings accounts of individuals of seventy-five (75) years of ag e or older; individuals who, as of 07.01.00, had received compensations or non-periodic similar payments on account of severance payments, compensations or life insurance payments in case of death, disability or accident, the amounts of which had been deposited in those institutions; individuals who could fairly evidence the immediate need of surgery or medical treatment with studies and diagnosis carried out in hospitals or medical facilities in the country or abroad, or the purchase of medication related thereto, for the account holder, its ancestors and descendants and spouse. This Circular Letter was amended by Communication "A" 3467. Communication "A" 3447. OPASI - 2 - 286. (01.24.02) The Central Bank extended, until 02.15.02, the term to exercise the option to transfer, either partially or totally, the balance of foreign cur rency-denominated current accounts the holders of which were legal persons- to current accounts in Pesos, in the same institution, applying the exchange rate of the official market (in this case, $1.40 per US Dollar). Said measure also comprised individuals who held current accounts and savings accounts in foreign currency for sole ownerships.
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Communication "A" 3454. CIRMO - 3 - 13. (01.28.02) Pursuant to Resolution 23/2002 of the Ministry of Economy, the Central Bank informed that all payment checks issued in Dollars until 01.04.02, which have not been cashed or credited to an account, could, at the beneficiary's option, be credited to accounts in Pesos at an exchange rate of $1.40 Pesos per US Dollar. Communication "A" 3456. CREFI - 2 - 34. (01.29.02) The BCRA repealed the provision by means of which it was set forth that requests for the creation, merger and transformation of institutions would be considered executed once 120 calendar days have elapsed from the date the corresponding requirements were verified. Communication "A" 3459. RUNOR - 1 - 514. (02.03.02) The BCRA provided for a bank and exchange holiday on February 4 and 5, 2002, with authorization to carry out certain transactions in Pesos. Communication "A" 3460. RUNOR - 1 - 515. (02.05.02) The Central Bank established a bank and exchange holiday on February 6 and 7, 2002. Communication "A" 3462. OPASI - 2 - 288. (02.07.02) The treatment of dishonored checks due to lack of funds between 12.03.01 and 01.31.02 was made more flexible, temporarily excluding them from the "Return Check Central Office". It was also set forth that institutions should verify interests applied to customers on account of rejection fee, as well as decisions regarding the close of accounts for such reason. Communication "A" 3463. LISOL - 1 - 371. (02.07.02) For the purpose of debtors rating for January 2002, the BCRA set forth that the total delinquency allowed for debtors rated in categories 1 and 2, both for the commercial portfolio and consumption portfolio, would be 93 and 152 days, respectively. Furthermore, it set forth that for February 2002, the total delinquency allowed for debtors rated in categories 1 and 2, for the commercial portfolio and consumption portfolio, would be 62 and 121 days, respectively. Communication "A" 3466. RUNOR - 1 - 517. (02.07.02) As of 02.08.02, the regular specific activities of financial institutions were resumed, as long as said activities exclusively implied the use of Pesos or movements in Pesos. |59|
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Financing settlement was not authorized, except when related to the payment of credit card balance statements in Pesos. In turn, the effectiveness of the exchange holiday set forth for February 4 to February 7, 2002, was extended to 02.08.02. Communication "A" 3467. OPASI - 2 - 289. (02.08.02) The BCRA amended the restrictions on cash withdrawals from deposits and the Deposit Rescheduling System. In such respect, the Central Bank issued several clarifications, among them, that cash withdrawals in foreign currency could only be made at the desks. Consequently, financial institutions would not be able to provide foreign currency through automatic teller machines. Furthermore, it set forth that the conversion of deposits in US Dollars to Pesos referred to in Decree 214/02 would not include the fixed term deposits made in cash as of 12.03.01, nor the balances of special accounts for deposits in cash. Neither would it include current accounts, savings accounts and fixed term deposits held by foreign diplomatic or consular representatives, international agencies, special missions, etc. Furthermore, it issued new regulations regarding transfers between accounts directed by customers and debits to current accounts or savings accounts for the sale of foreign currencies. Lastly, and due to the conversion to Pesos of the current accounts held by financial institutions in the BCRA pursuant to what is set forth in Decree 214/02, it pointed out that pending adjustments for clearing transactions through the Electronic Clearing Houses corresponding to cycles with closing date on 01.07.02 and previous dates, which would originate movements of funds between customers' accounts and correspondent accounts between financial institutions and which were in US Dollars, could be settled by converting the corresponding debits or credits pursuant to what was set forth in section 2 of the abovementioned Decree. Communication "A" 3468. CAMEX - 1 - 325. (02.08.02) Pursuant to what is set forth in section 10 of Decree 214/02, it was decided that financial institutions should sell to the Central Bank their available funds in US Dollars and other foreign currencies, at the close of business on 02.01.02, at the exchange rate provided for by said Decree ($1.40 per U.S. Dollar or its equivalent in other currencies). This provision was immediately suspended by Telephonic Communication 5908. (Communication "C" 34042).
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Communication "A" 3469. RUNOR - 1 - 518. (02.08.02) The BCRA announced that, as of 02.11.02, financial institutions should resume their specific transactions as usual, except for the settlement of financing other than credit card balance statements in Pesos. Communication "A" 3470. LISOL - 1 - 371. (02.08.02) As of 02.01.02 and in respect of the balance verified as at 11.30.01, an additional Minimum Cash requirement was incorporated due to the increase in deposit amounts. Additionally, a minimum 25%-cash requirement on the monthly mean of the daily increase recorded for deposits as of 02.01.02 was observed, in respect of the balance verified on 01.04.02. Communication "A" 3471. CAMEX- 1 - 326. (02.08.02) As of 02.11.02, it was decided that a Single Free Exchange Market would be in operation for all exchange transactions, leaving without effect all previous exchange rules and regulations contrary to the provisions of this Communication. Communication "A" 3473. CAMEX - 1 - 327 and COPEX 1 - 262. (02.09.02) The Central Bank set forth the procedure for foreign currency transactions on account of foreign trade transactions related to goods and services to be settled as of 02.11.02, within the framework of the new Single Free Exchange Market. Communication "A" 3474. RUNOR - 1 - 519. (02.11.02) The Central Bank communicated that exchange activities on 02.12.02 and on 02.13.02 would be based upon the terms of Communication "A" 3469, which excepted the settlement of financing and allowed the reception of payments for credit card balances in Pesos. Communication "A" 3478. CAMEX - 1 - 328. (02.14.02) The Central Bank set forth that principal settlements of new financing entered through the Single Free Exchange Market as of 02.11.02 would not need the BCRA prior authorization. Communication "A" 3481. OPASI - 2 - 290 and LISOL - 1 - 372. (02.19.02) The Central Bank made the Deposit Rescheduling System more flexible, providing for that certificates evidencing such deposits could be used for the purchase of real property and new vehicles, including agricultural, road and industrial machines, and for the total or partial settlement of financing (except for credit card balances). |61|
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Communication "A" 3485. OPASI - 2 - 291. (02.22.02) By means of this Communication, the BCRA allowed the creation of non-transferable fixed term deposits, for at least 7 days, both in Pesos and in foreign currency, at a fixed exchange rate freely agreed upon, as long as said deposits were created with cash or with transfers from abroad that could be paid in cash and were not related to foreign trade transactions. Communication "A" 3486. OPRAC - 1 - 520. (02.22.02) The Central Bank decided that financial institutions should apply the foreign currency loan capacity originated from deposits in foreign currency to the granting of pre-financing and financing of exports. Furthermore, this loan capacity could be used for the agreement of inter-financial loans that reception institutions would apply to the abovementioned purposes. Application defects should be subject to an equivalent increase of the minimum liquidity requirements and/or the minimum cash requirements. Communication "A" 3487. LISOL - 1 - 373. (02.22.02) As of 03.01.02, the contribution to the Bank Liquidity Fund on the daily balance mean of deposits from the private sector in Pesos and in foreign currency, corresponding to November 2001, was fixed in 1.90%. To such effect, deposits in foreign currency would be converted at the exchange rate of one Peso with forty cents per U.S. Dollar, or its equivalent in other currencies. This provision was left without effect by Communication "A" 3513. Communication "A" 3488. CAMEX - 1 - 329. (02.22.02) Transfers abroad made by financial institutions for own transactions regarding transfers, financial derivatives and their guarantees would not be subject to the prior authorization requirement by the Central Bank. Communication "A" 3493. CAMEX - 1 - 331. (02.26.02) The Central Bank disclosed the regulations regarding monitoring of transactions with foreign currencies as regards exports of consumption goods and pre-financing and export advances from abroad.
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Communication "A" 3494. OPRAC - 1 - 521. (02.28.02) The term granted to debtors mentioned in subsections 1 and 2 of Communication "A" 3398 for the total or partial settlement of their debts as at 11.02.01 plus interests until their effective settlement, by means of national public bonds, was extended until 03.31.02. Communication "A" 3495. CAMEX - 1 - 332. (02.28.02) The prior authorization requirement by the BCRA to carry out transfers abroad in order to settle debts with Multilateral Credit Agencies was eliminated. This provision was left without effect by Communication "A" 3570. Communication "A" 3496. OPASI - 2 - 292. (03.01.02) The Central Bank provided for that deposits made by Court order with funds from legal actions within the jurisdiction of said Courts would be exempt from the Deposit Rescheduling System. Communication "A" 3498. LISOL - 1 - 374, OPASI - 2 - 294 and RUNOR - 1 - 527. (03.01.02) Effective as of 03.01.02, the Central Bank approved the rules and regulations governing "Minimum cash requirements" and, in turn, it repealed the rules and regulations g overning "Minimum liquidity requirements" and "Mandatory debt instrument issue and placement", effective as of the same date. The observance of the November 2001/February 2002 quarterly position of minimum cash and minimum liquidity requirements was determined, and the liquidity reserve requirements were unified in the minimum cash requirements, as of 03.01.02. Communication "A" 3500. CAMEX - 1 - 333. (03.01.02) The BCRA disclosed the system for the determination of the reference exchange rate, which would be published daily by means of Press Release. For such purpose, at least four financial institutions would be selected so that they informed, through the SIOPEL system of the Electronic Bond Market, the quotations of the exchange rate for the purchase and sale of US Dollars for transactions to be settled in Pesos and US Dollars on the settlement date. Once said information was compiled, the Central Bank would calculate the reference exchange rate.
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Communication "A" 3501. CAMEX - 1 - 334. (03.04.02) By means of this Communication, the Central Bank set forth certain exemptions to the BCRA prior authorization requirement for transfers abroad for the payment of principal service of financial loans and of profits and dividends realized during the following 90 calendar days, from 02.11.02 Communication "A" 3504. OPRAC - 1 - 522 and LISOL - 1 - 375. (03.07.02) The BCRA allowed financial institutions to accept, in the proportions and under the conditions to be determined, LECOP (Letras de Cancelaci贸n de Obligaciones Provinciales -Provincial Obligations Settlement Drafts) and PATACON (Letras de Tesorer铆a para Cancelaci贸n de Obligaciones de la Provincia de Buenos Aires -Buenos Aires Province Treasury Settlement Drafts) for the payment of financed balances or credit card statements in Pesos. It also set forth that the total amount of such Drafts should not exceed the higher of: 5% of the Accountable Equity Liability or $500,000. Communication "A" 3506. OPASI - 2 - 295 and LISOL - 1 - 376. (03.13.02) The Central Bank amended the rules and regulations governing "Guarantees for intermediation in third party transactions" and "Minimum cash requirements." In such respect, the minimum term for "acceptance" transactions was reduced to 7 days, unless that, as regards documents in Pesos, the investment would have been made by means of check or transfer from current account or savings account; and it was set forth that documents in US Dollars would have to be issued by foreign importers of goods from the country in favor of local exporters, or by the latter in order to finance exports under duly executed contracts. Furthermore, the Central Bank reduced the requirements regarding reserves on fixed term deposits and on "acceptances", according to their term, in case placements were carried out in cash, by means of debit to special accounts for deposits in cash or by means of transfers received from abroad that could be paid in cash and not related to foreign trade transactions. This Circular Letter was included in Communication "A" 3835 by way of amendment. Communication "A" 3507. OPRAC - 1 - 523. (03.13.02) The BCRA set forth rules and regulations applicable to the scope of Decrees 214/02 and 410/02 for active transactions and inter-financial loans. In this sense, it provided for the conversion to Pesos, at a rate of one Peso per U.S. Dollar, of the balances, as at 02.03.02, of financing in foreign currency effective as at 01.05.02, owed by holders from the non-financial private sector, except for financing related to foreign trade compliant with certain conditions. Furthermore, the Central Bank set forth the criteria for the settlement of such financing, which |64|
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would be adjusted by means of the Reference Stabilization Coefficient (CER), and to which interest rates subject to maximum limits would be applied. Communication "A" 3508. LISOL - 1 - 377. (03.14.02) The amounts contributed to the Bank Liquidity Fund as of 03.01.02, including amounts that exceeding the equivalent of the compulsory payment, were admitted as a deductible component of the minimum cash requirement. This Circular Letter was left without effect by Communication "A" 3549. Communication "A" 3511. CAMEX - 1 - 335. (03.14.02) The BCRA defined the General Exchange Position and provided for that, as of the close of business corresponding to 03.15.02, said position could not exceed 5% of the Accountable Equity Liability recorded at the end of November 2002. This Circular Letter was included in Communication "A" 3645 by way of amendment. Communication "A" 3512. CAMEX - 1 - 336. (03.25.02) The Central Bank provided for that financial institutions which recorded an excess in their General Exchange Position as at 03.25.02, had to remedy their situation before 04.19.02. The excess in the General Exchange Position would neither be higher than 70% as at 04.05.02, nor higher than 40% as at 04.12.02, when compared to the one recorded at the date of this Circular Letter. In case of default, institutions should refrain from conducting exchange transactions and would be subject to the penalties set forth in Section 41 of the Financial Institutions Act. This Circular Letter was included in Communication "A" 3645 by way of amendment. Communication "A" 3513. LISOL - 1 - 379. (03.15.02) Effective as of 03.15.02, the BCRA fixed the contribution to the Bank Liquidity Fund in 3.5%. This provision was left without effect by Communication "A" 3582. Communication "A" 3515. CAMEX - 1 - 338. (03.15.02) The Central Bank provided for that, as of 03.18.02, institutions would need the prior authorization from the BCRA to conduct forward transactions abroad. This Circular Letter was included in Communications "A" 3525 and "A" 3622 by way of amendment. |65|
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Communication "A" 3524. REMON - 1 - 750. (03.22.02) The Central Bank provided for that the interest rate applicable to rediscount transactions and iliquidity advances was equivalent to 4/5 of the cut-off rate fixed in the offering of BCRA Drafts (LEBAC) in Pesos within a 7-day term and, in case there were more than one offering, that applicable to the shortest term. Furthermore, it was determined that institutions that had debts due to financial assistance of the Central Bank would not be allowed to take part in the bidding processes of BCRA Drafts. Communication "A" 3525. CAMEX - 1 - 341. (03.22.02) The Central Bank decided that, as of 03.22.02, prior authorization from the BCRA would be necessary for the settlement of forwards and other financial derivatives abroad. Communication "A" 3526. REMON - 1 - 751. (03.22.02) The Central Bank informed that, as of 03.25.02, the interest rate applicable to active transfer transactions for said Bank, on delivery of public bonds, already carried out or to be carried out in the future, should be equivalent to 6/5 of the cut-off rate corresponding to the most recent offering of BCRA Drafts in Pesos and US Dollars and, in case there were more than one offering on the same date, that applicable to the shortest term, which rate would be applicable as of each issuance and settlement date of the drafts offered. Communication "A" 3527. OPASI - 2 - 298 and REMON - 1 - 752. (03.25.02) The rules and regulations governing "Term deposits and investments" and "Minimum cash requirements" were amended. In such respect, the minimum term of Peso-denominated deposits that could be created with funds not available in cash was reduced to 14 days. The Central Bank also provided for that it would admit the creation of fixed term deposits in Pesos with funds from current accounts and savings accounts in Pesos regarding balances not available in cash, with a minimum term of 14 days. Deposits in US Dollars that could be settled in Pesos should be made for a term of 14 days or more with cash or debit to current accounts or savings accounts charged to the margin available in cash or with debit to special accounts for deposits in cash. Furthermore, a 0% minimum cash requirement was set forth for fixed term deposits in US Dollars that could be settled in Pesos.
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Communication "A" 3528. OPRAC - 1 - 524. (03.25.02) The BCRA Drafts in US Dollars were incorporated as allowed application of the loan capacity originated from deposits made in foreign currency, which application would also be integrated with fixed term deposits in said currency that could be settled in Pesos. Communication "A" 3531. RUNOR - 1 - 533. (03.25.02) As of the date of this Circular Letter, the Central Bank authorized the Interbank Clearing of U.S. Dollar bills. Said provision was left without effect by Communication "B" 7657. Communication "A" 3532. RUNOR - 1 - 534. (03.25.02) The Central Bank informed the financial institutions that the purchase and sale of book-entry national and provincial public bonds, provided that it was a transaction authorized for the type of intervening institution, could only and exclusively be carried out on delivery of Pesos. Communication "A" 3534. CAMEX - 1 - 344. (03.25.02) The Central Bank reduced the additional term for the effective settlement of export and service collections to 5 business days. Communication "A" 3536. CAMEX - 1 - 346. (03.25.02) The Central Bank determined that the increase recorded in the General Exchange Position excess as at 03.22.02, in comparison to 03.14.02, on 5% of the Accountable Equity Liability at the end of November, 2001, or of US$ 1,000,000 in case the limit was less than that amount, should be assigned to the Central Bank at the date of issuance of this Circular Letter. Institutions that did not comply with this requirement could not conduct exchange transactions as of 03.26.02. Communication "A" 3537. CAMEX - 1 - 347. (03.25.02) As of 03.25.02, institutions were required to have the prior authorization from the BCRA for the settlement of interests and principal services of financial debts abroad. Communication "A" 3548. OPRAC - 1 - 525. (03.27.02) The system of exceptions to the prohibition to grant financing to holders of the non-financial public sector was left without effect. |67|
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Communication "A" 3549. REMON - 1 - 753. (03.27.02) The Central Bank communicated new provisions applicable to "Minimum cash requirements." Effective as of 03.01.02, the Central Bank provided for that the obligations to the Insurance and Financial Institutions Assistance Trust Fund would have a 0%-rate requirement, and sight deposits and fixed term deposits made by Court order with funds from legal actions in which said Courts had jurisdiction, and their fixed balances, a 10%-rate requirement. For deposits included in the "Deposit Rescheduling System," in the cases the maturity of the last installment of the schedule would operate as of March 2003, the minimum cash requirement rate would be 0%. The Central Bank also provided for that the rate to be used to determine the charge for deficiencies in the minimum cash requirements in the mean monthly position, in Pesos and in foreign currency, recorded in March 2002, would be equivalent to an annual nominal rate of 28%. Communication "A" 3550. REMON - 1 - 754. (03.27.02) The Central Bank issued supplementary rules and regulations for the determination of the fourmonthly position of Minimum cash and Minimum liquidity requirements for the November 2001/February 2002 period. In order to calculate the minimum liquidity requirements for January and February 2002, the residual term of fixed term deposits whether or not subject to rescheduling- would be considered in case deposits were originally made in foreign currency, as if they had a residual ter m longer than 365 days and, if they had been originally made in Pesos, pursuant to the residual terms structure for January and February 2002, respectively. Contributions made to the Bank Liquidity Fund, in the currency in which they were made, would be deducted from the minimum cash requirement. For January and February 2002, assets in foreign currency admitted for the integration of minimum cash requirements as well as computable components for the calculation of the minimum cash requirement in foreign currency; the computable components in the minimum liquidity requirements in foreign currency and the components in foreign currency admitted for the integration of the minimum liquidity requirements would be converted to Pesos at the rate of $1.40 = US$ 1. Communication "A" 3555. OPASI - 2 - 299. (04.04.02) The BCRA provided for that, as of 01.02.03, financial institutions would be able to settle in advance certificates of rescheduled deposits issued by them at their nominal value, including interests accrued and not yet matured, recalculated, if appropriate, pursuant to the application of the CER (Reference Stabilization Coefficient). This Circular letter was left without effect by means of Communication "A" 3644. |68|
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Communication "A" 3558. LISOL - 1 - 380 and OPRAC - 1 - 526. (04.10.02) By virtue of the repeal of the rules and regulations governing "Minimum liquidity requirements" and "Mandatory debt instrument issue and placement" set forth by Communication "A" 3498, the final texts of the following rules and regulations were updated: Acceptance of bonds as security for the debt; Minimum capital requirements of financial institutions; Assignment of credit portfolio; Placement of debt instruments and obtaining of foreign lines of credit; Transactions with mutual funds; Liquidity position, Fixed assets' and other components' ratio and Consolidated supervision. Communication "A" 3561. OPRAC - 1 - 527. (04.12.02) The BCRA amended the rules and regulations applicable to the scope of Act 25,561 and Decrees 214/02 and 410/02, for active transactions and inter-financial loans. Among the major changes it was provided for that eventual responsibilities of the pesification benefit would be excluded, as well as, for the pre-financing of exports, the portion of the debt exceeding 75% of the FOB value of the exports would not be pesified. Communication "A" 3562. OPRAC - 1 - 528. (04.12.02) The Central Bank extended until 05.15.02 the term granted so that debtors mentioned in subsections 1 and 2 of Communication "A" 3398 could settle, in whole or in part, their debts at 11.02.01, plus interests until their effective settlement, using national public bonds. Furthermore, it was set forth that public bonds in US Dollars or other foreign currency used to settle debts in the financial system would be converted to Pesos, at a rate of one Peso per U.S. Dollar or its equivalent in other foreign currency, and that debtors of National State banks rated in category 3 in August 2001 and rated in category 4 or inferior in December 2001, could conduct this debt settlement transaction without the prior authorization of the creditor financial institution. If the competent authorities so decided, financial institutions that belong to the provinces or to the City of Buenos Aires could adhere to the criteria indicated in the abovementioned paragraph. Communication "A" 3563. OPRAC - 1 - 529. (04.12.02) The Central Bank clarified that the repeal of exceptions to the rules and regulations governing the "Non-financial Public Sector Financing" would only have effect for financing implying new fund disbursements, reason for which the procedure to consider exceptions to the prohibition generally set forth would continue being applicable to the principal refinancing of credit facilities already granted and, eventually, its interests, as long as that did not imply any additional resource disbursements. Communication "A" 3565. REMON - 1 - 755. (04.16.02) The Central Bank set forth the interest rate applicable to the assistance stock granted under the rediscount and advance-payment system on account of iliquidity before 03.25.02. |69|
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Communication "A" 3567. CAMEX - 1 - 355. (04.17.02) It was provided for that exchange purchases and sales between institutions authorized to conduct exchange transactions and between them and the BCRA, should be exclusively limited to cover the needs originated from transactions carried out by such institutions for customers' purchases and/or sales and carried out through Siopel. The BCRA would admit exchange purchases and sales between authorized institutions outside Siopel when one or both parties were not authorized to conduct this kind of transactions, and as long as transactions were made without the intervention of exchange brokers and for a daily amount not higher than the equivalent to US$ 800,000, taking into consideration the addition of both components for each institution. Communication "A" 3568. CAMEX - 1 - 356. (04.19.02) The BCRA excluded from the prior authorization requirement the transfers for principal service payments corresponding to public bonds issued under financial trusts the net worth of which was made up of mortgage debts and bills. Communication "A" 3570. CAMEX - 1 - 357. (04.19.02) The need to obtain prior authorization from the BCRA for transfers made abroad in order to settle debts with Multilateral Credit Agencies, under certain conditions, was eliminated. This provision was included in Communication "A" 3627 by way of amendment. Communication "A" 3571. RUNOR - 1 - 541. (04.19.02) A bank and exchange holiday was determined as of the close of business on 04.19.02. Communication "A" 3572. OPASI - 2 - 301. (04.19.02) The Central Bank excepted from the Deposit Rescheduling System the amounts necessary to pay expenses for the treatment of seriously ill individuals whose lives were at high-risk, whether any of the original holders of the account or their ancestors or descendants and spouse, crediting to a current account or savings account up to $15,000 for treatments in Argentina, and the equivalent to US$ 20,000 for treatments abroad, in the aggregate; as well as the accounts that constitute the credit of mutual funds for the withdrawal of resources corresponding to the shareholders, original holders, who would have requested the redemption of their holdings. Communication "A" 3574. CONAU - 1 - 445. (04.22.02) The BCRA issued certain guidelines, to be exclusively applied to the financial statements on 12.31.01. |70|
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In such respect, assets and liabilities in foreign currency had to be valued at the exchange rate of one Peso per U.S. Dollar ($1=US$1). By means of a description included as a note to the Financial Statements of the events that took place after the close of the fiscal year, institutions had to reflect the effects thereon of devaluation of the Argentine Peso and of other provisions related to the conversion of receivables and obligations in foreign currency to Pesos, at different exchange rates. Until otherwise communicated, the distribution of profits was suspended. Communication "A" 3576. RUNOR - 1 - 542. (04.22.02) The bank and exchange holiday provided for by Communication "A" 3571 was extended until 04.25.02. Communication "A" 3577. RUNOR - 1 - 543. (04.23.02) Effective as of 04.24.02, during the bank and exchange holiday disclosed through Communications "A" 3571 and 3576, the Central Bank authorized transactions in Pesos for the payment of all the pension contributions and social security plans in charge of ANSeS and the transfers between employers' accounts or between employers' accounts and workers' accounts in order to pay salaries, within the same institution. Communication "A" 3580. RUNOR - 1 - 546. (04.25.02) The Central Bank provided for a bank and exchange holiday on 04.26.02 until 12 AM and extended the bank and exchange holiday with authorization to conduct certain transactions in Pesos until midnight of 04.26.02. Communication "A" 3582. LISOL - 1 - 381. (04.26.02) The BCRA fixed the contribution to the Bank Liquidity Fund in 0%. Communication "A" 3583. OPASI - 2 - 302 and REMON - 1 - 757. (04.26.02) Rules and regulations governing the opening of "Savings deposit, payment of salaries, pension and special savings accounts" and the "Minimum cash" requirement were amended. In that respect, the subsection on special sight accounts in foreign currency was added to the rules and regulations on "Savings deposits, payment of salaries, pension and special savings accounts". The Central Bank provided for that the aforementioned account could be held by foreign diplomatic or consular representatives, international agencies, special missions and commissions or |71|
Annual Report | 2002
bilateral or multilateral bodies created by treaties to which Argentina is a party, as well as the foreign officers of such institutions, duly authorized by the Ministry of Foreign Affairs, International Commerce and Religion, provided that such accounts were related to the performance of their duties and the official agencies or institutions in charge of the execution of loan or gift agreements entered into with multilateral credit agencies for the financing of investment projects. Communication "A" 3586. CAMEX - 1 - 361. (04. 29.02) Transfers abroad for the settlement of foreign currency hedging transactions were excepted from the requirement to have prior authorization from the BCRA. Communication "A" 3593. RUNOR - 1 - 548. (05.02.02) The Central Bank approved the updating of the communications dissemination system and provided for that texts of Communications "A", "B" and "C" should be simultaneously disseminated through the new version of the STAF and the BCRA's web site on the Internet. In such respect, the Central Bank set forth that Communications "A", "B" and "C" would be considered valid and effective, producing all the legal and evidence-related effects, as of the moment their original files became available through the new version of the STAF. Such Communications would maintain their mandatory rule nature. Furthermore, all the regulatory Communications would continue to be published in the Official Bulletin. Financial institutions should file and keep the Communications issued through the STAF in true and durable support means during the corresponding legal periods of time. Printed copies of the files of Communications "A", "B" and "C" stored in the magnetic devices used by the BCRA as support for the STAF and as Internet servers, could be considered documentary evidence. The nullity of the Communications issued, whatever the reason, could not be invoked unless the existence of failures in the system, exclusively ascribable to the Central Bank, could be fairly evidenced. Communications "A", "B" and "C" would be effective as of the day after the issuance date mentioned in their respective texts, except other currency date was set forth therein. Said provisions became effective as of 06.03.02. Communication "A" 3597. REMON - 1 - 758. (05.03.02) Effective as of 05.01.02, the rules and regulations governing "Minimum cash requirements" were amended. |72|
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Sight obligations for drafts and transfers from abroad pending payment and for correspondent foreign bank transactions were excepted from the minimum cash requirements. The Central Bank provided for that the defect in "minimum application of resources from sight obligations in Pesos" determined in one month, would be computed at an equivalent amount in the calculation of the minimum cash requirement in Pesos for the same period. For certain components, the minimum cash requirement rate to be paid was reduced in 18 points, to 22%. Finally, the subsection governing "Minimum cash requirements" related to the maximum computation limit for determination of the integration of foreign currency requirements was left without effect. Communication "A" 3598. OPRAC - 1 -530 and REMON - 1 - 759. (05.03.02) Effective as of 05.01.02, the BCRA approved the rules and regulations governing "Minimum application of resources from sight obligations in Pesos" and authorized the application of this system and of the new minimum cash structure, with effect as of 03.01.02, to financial institutions that so requested. This Circular Letter was included in Communication "A" 3660 by way of amendment. Communication "A" 3601. RUNOR - 1 - 549. (05.07.02) The Central Bank suspended the application of the rules and regulations governing "Financial Institutions Rating" and included certain temporary provisions in the rules and regulations governing "Investments with resources from retirement and pension funds. Assets Rating", which would be applied as long as the "Financial Institutions Rating" system remained suspended. In that regard, the Central Bank provided for that institutions that received deposits with resources from Retirement and Pension Funds and/or institutions wanting to become Retirement and Pension Funds, should at least have one risk rating issued pursuant to certain conditions. Ratings should be obtained quarterly. Rating companies should rate assets included in subsections 1.2.1. and 1.2.2. of the rules and regulations governing Investments with Resources from Retirement and Pension Funds Asset Rating, pursuant to their own methods, which should be communicated to the Superintendence of Financial and Exchange Institutions, together with the rating granted. Communication "A" 3603. REMON - 1 - 760. (05.09.02) By means of this Communication, effective as of 05.13.02, the BCRA infor med institutions that would request financial support subject to the provisions of subsections b), c) and f) of section 17 of the Articles of Incorporation of the BCRA, that, apart from complying with the requirements |73|
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set forth for the assistance requests determined in Communication "A" 2925 and supplementary communications, they should submit certain documents and information indicated in the regulation. Furthermore, the Central Bank provided for that the reception of financial assistance due to iliquidity would imply the prohibition to move funds for any activity that implied the addition of new assets, whether assets received through assistance or assets generated by the transactions conducted by the institution. Any exception to what is provided for in this paragraph should be assessed and approved by the Central Bank. Communication "A" 3606. OPASI - 2 - 303. (05.10.02) The BCRA added to the "Deposit Rescheduling System" the provision governing releases to be applied to the payment of the price, either total or partial, of new national or imported vehicles, or of vehicle adaptation commands and automatic transmission in order to be incorporated to national vehicles intended for use by disabled people, whether owned by any of the original holders of the account or by any member of its family, as long as compliance with some conditions would have been verified before the release. This Circular Letter was included in Communication "A" 3804 by way of amendment. Communication "A" 3607. REMON - 1 - 761. (05.13.02) In order to mitigate the impact on the liquidity of institutions granted assistance, which would have been asked to submit a regularization and remedy plan before 05.13.02 or which were included within any rescheduling alternative to protect the credit and bank deposits, the BCRA provided for that institutions included in sections 34 and 35 bis of the Financial Institutions Act could choose, within one year as of 04.01.02, between capitalizing 100% of the amount on account of interests corresponding to transactions provided for in section 17 of the Articles of Incorporation, conducted and to be conducted, and which should evidence enough security, or, otherwise, to contribute such transactions. Communication "A" 3614. REMON - 1 - 762. (05.29.02) The BCRA informed that it temporarily suspended the application of the guidelines for the granting of financial assistance due to iliquidity, Annex to Communication "A" 3603. Communication "A" 3616. CAMEX - 1 - 372. (05.30.02) The Central Bank communicated that, as of 05.30.02, financial institutions authorized to carry out foreign trade transactions could start conducting, with debit to current account or use of customer's own check, foreign currency sale transactions to customers for "payments made abroad for purchases of goods not entered to the country and sold to third countries", provided that certain conditions were complied with. |74|
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Communication "A" 3619. CAMEX - 1 - 373. (05.31.02) As of 05.31.02, foreign currencies entered due to advances and pre-financing of exports for any amount, on account of collection of exports corresponding to shipment permits made official and complied with, which are higher than the equivalent of US$ 1,000,000, should be settled and assigned to the BCRA at the exchange rate of the single free exchange market. Communication "A" 3620. CAMEX - 1 - 374. (05.31.02) Effective as of 05.31.02, institutions would need prior authorization from the Central Bank to carry out transfers abroad for own transactions on account of sales that could only be made in Pesos in transactions with customers. Communication "A" 3622. CAMEX - 1 - 375. (06.03.02) Through this Communication, the BCRA provided for that institutions needed the prior authorization from the abovementioned Institution for forward transactions, whether for local transactions or transactions abroad. Communication "A" 3623. REMON - 1 - 763. (06.04.02) The Central Bank set forth the interest rate applicable to extended or renewed assistance as of May 2002, corresponding to the stock of debt for financial assistance due to iliquidity as of and including 03.24.02. Communication "A" 3626. CAMEX - 1 - 377. (06.05.02) Transfers abroad for the settlement of hedging contracts regarding commodities' prices were excepted from the prior authorization requirement by the BCRA. Communication "A" 3627. CAMEX - 1 - 378. (06.05.02) Transfers abroad for the payment of principal service of debts from the private sector owed to export credit insurance companies that are members of the International Union of Credit and Investment Insurers or that are secured thereby, were excepted from the prior authorization requirement by the BCRA. Communication "A" 3630. LISOL - 1 - 382. (06.10.02) As regards debtors rated in categories 2 and 3 with up to 62 and 121 days of delay in payment, respectively, both for the commercial and consumer portfolio, the BCRA provided for that, |75|
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between March and June 2002, financial institutions could observe provisioning levels corresponding to the immediately previous category. Furthermore, the Central Bank suspended the restriction to rate debtors whose debt instruments had a risk rating below "BB" in category 1. Communication "A" 3637. OPASI - 2 - 305. (06.15.02) As regards Decree 905/02 and Resolution 81/02 of the Ministry of Economy, the Central Bank implemented the option to exchange rescheduled deposits for National Government Bonds. Communication "A" 3638. CAMEX - 1 - 380. (06.18.02) The Central Bank reduced the limit of the equivalent in US Dollars from 1,000,000 to 500,000, corresponding to the amount of shipping permits made official and complied with, the collection of which had to be settled and assigned to the Central Bank at the exchange rate of the Single Free Exchange Market. This Circular Letter was left without effect by means of Communication "A" 3711. Communication "A" 3640. CAMEX - 1 - 381. (06.19.02) As of 06.19.02, institutions authorized to carry out exchange transactions were required to have the Central Bank's prior authorization to make own purchases of any kind of assets, provided payment was made against delivery of foreign currency or other type of foreign asset that would theoretically be a part of the General Exchange Position. Communication "A" 3644. OPASI - 2 - 306. (06.25.02). The BCRA determined that financial institutions could improve the conditions set forth for the return of rescheduled deposits as long as at least certain guidelines were complied with and, in the case of advance repayments or total or partial repurchase of rescheduled deposits, funds would be deposited in sight accounts, current accounts or savings accounts, their use being subject to the restriction currently in force as regards resources availability. The Central Bank also provided for that improvements in the conditions set forth for repayment of rescheduled deposits implying advance repayments could be carried out under certain conditions. Furthermore, the BCRA left Communication "A" 3555 without effect as well as the prohibition to repurchase certificates set forth in paragraph vi) of subsections 2.1. and 2.2. of the annex to Communication "A" 3467 and supplementary Communications, provided it complied with what is set forth above.
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Communication "A" 3645. CAMEX - 1 - 382. (06.26.02) The Central Bank amended the definition of the General Exchange Position (PGC). In such sense, it provided for that banks should compute in the PGC the total liquid foreign assets, including those purchases and sales of said assets made and pending settlement for the purchase and sale of foreign currency in a term not exceeding 48 business hours, and it also determined the maximum PGC limit for financial institutions in 5% of the Accountable Equity Liability (RPC) recorded at the end of November 2001 at the exchange rates in force at such time, with a minimum equivalent to US$ 1,000,000 for bank institutions. The maximum limit would be reduced by 50% in case the institution had debts on account of rediscounts payable to the Central Bank for an amount higher than 50% of the last RPC recorded by the institution. Minimum limits would be increased up to a maximum equivalent to US$ 1,000,000 for the foreign exchange holdings in a currency other than US Dollars and/or Euros. Communication "A" 3648. OPASI - 2 - 307. (06.27.02) Pursuant to the provisions of section 1, subsection c) of Decree 410/02, the Central Bank provided for that the conversion to Pesos set forth by Decree 214/02 would not include deposits in foreign currency made by foreign banks in local financial institutions, regarding which creditor banks would choose, until and including 07.26.02, to transform them to lines of credit denominated in the same currency, subject to certain conditions. Communication "A" 3649. CAMEX - 1 - 383. (06.28.02) Settlement of obligations for repurchase of assets used for the execution of foreign financing in the form of Repos, which were made as of the date of this Circular Letter, were excepted from the prior authorization requirement. Communication "A" 3650. LISOL - 1 - 383. (06.28.02) By means of this Communication, the Central Bank provided for rules applicable to sections 28 and 29 of Decree 905/02 as regards compensation to financial institutions for the asymmetric pesification of their assets and liabilities. With the purpose of determining the amount to be received in bonds, institutions should use the individual base balance sheet as of 12.31.01 for reference purposes. The Central Bank also provided for that the effects arising from preliminary injunctions granted by the Judicial Power would not be taken into consideration for set off calculation purposes. This Circular Letter was included in Communication "A" 3716 by way of amendment. |77|
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Communication "A" 3654. CONAU - 1 - 471. (07.04.02) As regards the information requirement for the application of sections 28 and 29 of Decree 905/02, related to the Set Off to Financial Institutions, the Central Bank informed that institutions should submit the information corresponding to accounting balances as of 12.31.01 thereto. Likewise, they should inform the amount of the Set Off and Hedging Bonds originated by the application of the calculation method provided for by Decree 905/02 and by Communication "A" 3650 and supplemental Communications. Communication "A" 3656. OPASI - 2 - 308. (07.05.02) The Central Bank provided for rules applicable to Decree 905/02 and Resolutions 81/02 and 92/02 of the Ministry of Economy, as regards the issuance of rescheduled deposit certificates (CEDROS), the exchange of rescheduled deposits for National Government Bonds, and the offer to improve conditions regarding repayment of rescheduled deposits. Communication "A" 3657. REMON - 1 - 764. (07.05.02) The Central Bank accepted Central Bank Drafts ("LEBAC") in Pesos and US Dollars as eligible instrument for carrying out active transfer transactions to the BCRA. Communication "A" 3660. OPASI - 2 - 309, OPRAC - 1 - 531 and REMON - 1 - 765.(07.12.02) Taking into account Decree 905/02, the Central Bank updated the rules and regulations governing "Term deposits and investments", "Minimum application of resources from sight obligations in Pesos" and "Minimum cash requirements", related to deposits with clause for application of the Reference Stabilization Coefficient (CER). In such respect, the Central Bank authorized the raising of fixed term deposits adjustable to CER, to be made with resources available in cash, for terms not less than 90 days, whose funds should be completely applied to the subscription of Central Bank Drafts in Pesos adjustable to said Coefficient. Communication "A" 3661. CAMEX - 1 - 384. (07.12.02) The Central Bank provided that its prior authorization was required in order that institutions authorized to conduct exchange transactions could carry out foreign exchange sales to non-resident individuals, in foreign currency or bills, for amounts higher than that equivalent to US$ 5,000 per calendar month; as well as for the execution of arbitration and swap transactions with financial institutions abroad, whose head offices or holding companies are not located in any of the countries member of the Basel Committee on Banking Supervision, and which, additionally, had at least an international rating of "A".
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Communication "A" 3663. OPASI - 2 - 310. (07.17.02) By means of this Communication, rules and regulations governing the "Deposit Rescheduling System" were amended. Communication "A" 3668. CAMEX - 1 - 385. (07.23.02) The BCRA informed that swap and arbitration transactions carried out by institutions authorized to conduct exchange transactions with branches and agencies of official banks abroad, should be excluded from the BCRA prior authorization requirement. Communication "A" 3673. CREFI - 2 - 35, LISOL - 1 - 384 and RUNOR - 1 - 566. (07.25.02) For the purposes set forth in section 28 of Decree 905/02, dated 05.31.02, it was provided for that mutual associations existing on such date, which rendered economic assistance services to their associates, could request authorization for the creation of new financial institutions to which they would transfer such business. Communication "A" 3674. LISOL - 1 - 385. (07.26.02) The Central Bank amended the rules and regulations governing the "Minimum application of resources from sight and term obligations in Pesos" applicable to the treatment of the "National Government Bonds 9% Due 2002." In such regard, the Central Bank accepted the decreasing computation as application of Pesodenominated obligations, between August 2002 and July 2003, of the amount of said Bonds, applied in July 2002, at a maximum. Communication "A" 3680. CAMEX - 1 - 388. (07.31.02) Settlements of principal and interests service of new financing entered in the Single Free Exchange Market as of 02.11.02 were excepted from the prior BCRA authorization requirement. Communication "A" 3681. OPASI - 2 - 313. (08.01.02) To the effects of what is set forth in section 4 of Decree 1316/02 related to release of CEDROS, the BCRA informed the procedure for the redemption of such deposits by way of release, in the cases exempt from the restrictions on the compliance with preliminary injunctions. Communication "A" 3682. OPASI - 2 - 312 and LISOL - 1 - 386. (08.02.02) Pursuant to section 26 of Decree 905/02, the rules and regulations for current accounts, savings accounts and other freely available sight accounts were disclosed, as well as their implementation. |79|
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Communication "A" 3686. OPRAC - 1 - 532 (08.06.02) The Central Bank determined that, to the effects of calculation of the technical value of public bonds originally denominated in US Dollars, converted to Pesos in compliance with section 3 of Decree 471/02, which would have been delivered for the settlement of bank debts, the value converted to Pesos at the rate of one Peso per U.S. Dollar should be taken into consideration. Likewise, it was pointed out that this provision was exclusively limited to the settlement of bank debts, pursuant to section 30 subsection a) and section 39 of Decree 1387/01. Communication "A" 3688. CAMEX - 1 - 390. (08.07.02) The BCRA provided for the maintenance, until 02.08.03, of the BCRA prior authorization requirement for transfers abroad corresponding to the payment of profits and dividends and/or to principal and interests service of financial loans. Furthermore, it set forth that those obligations from the private sector corresponding to settlements of new financing entered through the Single Free Exchange Market as of 02.11.02 would not need the BCRA prior authorization. Communication "A" 3689. OPASI - 2 - 317. (08.12.02) The application of rules and regulations governing "Pension savings account" which were part of Section 3 of the rules and regulations on "Savings deposits, payment of salaries, pension and special savings accounts" was suspended. Communication "A" 3690. OPASI - 2 - 314 and OPRAC - 1 - 533. (08.12.02) Pursuant to the provisions of section 7 of Decree 905/02 and section 4 of Resolution 81/02 of the Ministry of Economy, the Central Bank provided for that financial institutions debtors could apply, as partial or total payment of the financing received until 01.05.02, "CEDROS" issued by the same creditor institution, excluding from such transactions those balances due in sight accounts and credit or debit card balances. To such effects, financing should have an average currency term equal to or longer than that of the series of rescheduled deposits "CEDRO". Communication "A" 3696. OPASI - 2 - 315 (08.21.02) The Central Bank provided for that sales of LEBAC on the part of financial institutions, carried out in the secondary market to third parties outside the LEBAC holding financial system, whichever the type and time of acquisition thereof, could only be made as long as the counterparties paid with cash and/or other resources that, pursuant to the rules and regulations in force, were freely available and not subject to restrictions on their free cash availability. |80|
Annual Report | 2002
Communication "A" 3697. OPRAC - 1 - 534. (08.21.02). Pursuant to what was provided for by Decree 992/02, the Central Bank converted to Pesos, at a rate of one Peso and forty cents ($1.40) per U.S. Dollar or its equivalent in other currencies, the obligations to give amounts of money in US Dollars or in other foreign currency in all futures and option contracts, including term transactions carried out in compliance with the laws in force in Argentina as of 01.05.02, in which at least one of the parties was a financial institution, to be settled as of 06.12.02. Communication "A" 3698. OPRAC - 1 - 535. (08.21.02) The Central Bank amended the regulatory treatment of the "National Government Bonds 9% Due 2002" in relation to the minimum application of resources from sight and term obligations in the national currency. In such regard, the base for determining the amount deductible from the requirement applicable to obligations in Pesos, between August 2002 and July 2003, in relation to the abovementioned Bonds, was amended. Communication "A" 3700. CREFI - 2 - 36. (08.21.02) The rules and regulations governing the appointment of directors or counselors, general managers of financial institutions and representatives in charge of branches of foreign institutions and of financial institutions abroad not authorized to conduct transactions in this country were amended. In such regard, more requirements were added and the existing ones were deeply examined, to start taking the necessary steps for appointment in order to assume the abovementioned positions. Communication "A" 3702. CONAU - 1 - 484. (08.23.02) As a consequence of the repeal of Decree 316/95, the BCRA sent the updated rules and regulations governing the submission of financial statements in constant currency to the financial institutions and informed that December 2001 would be considered the last monetary stability period, for which reason the abovementioned provisions had to be applied as of 01.01.02. Communication "A" 3703. CONAU - 1 - 485. (08.23.02) Among other provisions, the item "Valuation difference not realized for the set off of the net position in foreign currency" was included in the Net Worth, which would reflect the set off amount received on account of the positive difference between net worth as of 12.31.01 and the amount originated from adjusting the net position in foreign currency converted to Pesos at the exchange rate of 1.40 per U.S. Dollar.
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Communication "A" 3705. CAMEX - 1 - 392. (08.26.02) By means of this Communication, the Central Bank amended the rules and regulations governing the Single Free Exchange Market, providing for acceptance of the application to export collections of export pre-financing advance payments and loans, plus interests thereon, of the capital of financial obligations abroad in force as of 11.30.01 which would be restructured to an average life longer than 5 years. Communication "A" 3706. CAMEX - 1 - 393. (08.28.02) The criterion for increase of the General Exchange Position was amended, providing for that minimum limits could be increased in US$ 500,000, when the financial institution conducted exchange transactions with 15 or more institutions and for up to a maximum of US$ 500,000, for checks against foreign banks bought to third parties, pending accreditation in correspondent accounts. Communication "A" 3707. OPASI - 2 - 316. (09.02.02) The Central Bank determined 10.01.02 as effective date for the "Freely available current accounts" system (Decree 905/02). Communication "A" 3708. OPASI - 2 - 317. (09.02.02) The Central Bank provided for new rules and regulations governing cash withdrawals from restricted availability accounts and the offer of options for the free availability of funds. In such regard, it allowed institutions to choose the free availability system they wanted for their transactions, by using the existing and restricted accounts, but extending withdrawal margins when freely available funds were deposited in such accounts; by opening special accounts for deposits in cash or else, freely available accounts. Communication "A" 3709. CAMEX - 1 - 394. (09.03.02) Settlements of principal and interests service of financial obligations abroad were excepted from the prior BCRA authorization requirement, having the institutions direct access to the exchange market in force at each time to conduct this kind of transactions, provided that certain conditions were complied with. Communication "A" 3710. RUNOR - 1 - 574. (09.03.02) The Central Bank implemented the new Electronic Means of Payment (MEP) in the Transactions Environment, with the purpose of contributing to the consolidation and development of the National Payment System, promoting this facility to make its integration with other systems possible and improving its operational, security and reliability characteristics. |82|
Annual Report | 2002
Communication "A" 3711. CAMEX - 1 - 395. (09.03.02) The limit of the equivalent to US$ 500,000 was reduced to US$ 200,000, for the shipment permits made official and complied with, whose collection should be settled and assigned to the Central Bank at the exchange rate of the Single Free Exchange Market. This provision was repealed by Communication "A" 3859 dated 1.7.03. Communication "A" 3712. CAMEX - 1 - 396. (09.03.02) The Central Bank provided for that borrowing transactions abroad from the non-financial private sector for bonds and financial loans, as long as they were not on account of interest capitalizations, should correspond to foreign exchange settlements in the Single Free Exchange Market and should be conducted for terms not less than 90 calendar days. Communication "A" 3715. CAMEX - 1 - 399. (09.05.02) The BCRA provided for the requirement to have the BCRA prior authorization to make payments of principal and interests service of bonds and financial obligations regarding local government debts. Communication "A" 3716. LISOL - 1 - 387. (09.05.02) The way to determine the amount to be received by financial institutions in Compensation Bonds from the National State due to asymmetric pesification was amended. This new calculation should be made taking into account only assets and liabilities items related to financial intermediation, instead of considering all assets and liabilities items. Communication "A" 3717. REMON - 1 - 766. (09.05.02) The Central Bank informed financial institutions about the provisions applicable as regards financial assistance that could be granted pursuant to what was set forth in Decree 905/2002, as supplemented and amended. In such sense, said Institution provided for the rules and regulations governing the Advance Payment in Pesos for the acquisition of "National Government Bonds in US Dollars Libor 2005", "National Government Bonds 2% in Pesos Due 2007" and "National Government Bonds in US Dollars Libor 2012". Communication "A" 3722. CAMEX - 1 - 400. (09.06.02) The Central Bank provided for that, as of 09.02.02, individuals and legal persons should get the prior authorization from said Bank for the purchase of foreign currency in the Single Free Exchange Market on the following accounts: portfolio investments abroad made by individuals; |83|
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other investments abroad made by residents in the country; investments abroad made by legal persons and purchase of foreign currency to be held in the country. Communication "A" 3724. OPASI - 2 - 318 and OPRAC - 1 - 536. (09.09.02) The Central Bank provided for that transactions for the purchase and sale of "CEDROS", with the intervention of the issuing financial institutions, should be conducted in self-regulated markets, in order that the purchaser could apply such documents to the settlement of financing referred to in Communication "A" 3690. Communication "A" 3727. CAMEX - 1 - 402. (09.09.02) The Central Bank set forth that transactions with any kind of assets conducted in self-regulated Securities Exchanges and Markets should be made in Pesos. This Circular Letter was left without effect by Communication "A" 3723. Communication "A" 3728. RUNOR - 1 - 578. (09.13.02) The BCRA disclosed the characteristics of the new check design to be given by financial institutions to their customers. In that regard, it informed that the current provisions should be applicable to checks corresponding to freely available current accounts. Communication "A" 3732. REMON -1 - 767 and OPRAC -1 - 537. (09.13.02) Through this Communication, the Central Bank set forth a reduction of the minimum cash requirement for term obligations, from 40% to 22%. However, in order to make the 18% reduction effective, the equivalent amount had to be allocated to the purposes provided for by the BCRA for the minimum application of resources from sight and term obligations in Pesos. Additionally, the increase of the minimum cash requirement was eliminated and it was provided for that these measures could be applied retroactively as of 05.01.02, at the option of institutions. Communication "A" 3733. CAMEX - 1 - 403. (09.17.02) Conciliations made by institutions for future foreign exchange transactions in regulated markets, the settlements of which were made in the country by means of set offs in national currency, were excepted from the BCRA prior authorization requirement.
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Communication "A" 3736. CONAU - 1 - 496. (09.18.02) Among other measures, the Central Bank informed that the effects on net worth caused by the conversion of assets and liabilities to Pesos and by the compensation to be received pursuant to the rules and regulations in force should be recorded as of January 2002. Communication "A" 3739. OPRAC - 1 - 538. (09.20.02) The Central Bank amended Communication "A" 3507, providing for that refinancing would be subject to the conditions freely agreed by the financial institution and the borrower, to which the CER could be applied, taking into account the provisions of section 27 of Decree 905/02. Furthermore, and pursuant to the provisions of Act 25,642, the Central Bank set forth the extension, until 09.30.02, of the date fixed for re-calculation of financing converted to Pesos, including the grace period, instead of the six-month term provided for in the aforementioned Communication. Said treatment should be followed in the case of debtors which debts in the entire financial system amounted to less than $400,000 pursuant to the information provided by the "Financial System Debtors Central" as of 12.31.01. Communication "A" 3740. OPASI - 2- 319. (09.20.02) By means of this Communication, the Central Bank provided for rules applicable to Decree 1836/02, governing Canje II of CEDROS for National Government Bonds in US Dollars or else for Fixed Term Drafts in Pesos issued by the institutions, together with the same exception cases. Furthermore, it provided for the instructions that allowed financial institutions to return rescheduled deposits of up to $7,000, with the option to extend said amount up to $10,000. Communication "A" 3748. OPRAC - 1 - 539 and REMON - 1- 768. (09.27.02) The Central Bank provided for that, as of October 2002, the increase of assets of financial institutions that had been granted financial assistance by said Bank in order to remedy iliquidity situations, should be limited to financing granted to customers of the non-financial private sector not related to the institution. The maximum amount to be granted in new financing would depend on the bank capacity to increase its deposits and on the relationship between rediscounts received and its Accountable Equity Liability. Furthermore, the Central Bank extended, until 01.02.03, the maturity of financial assistance granted by the Central Bank to remedy iliquidity situations of financial institutions in force at the date of this Communication, and it approved the computation method of the assistance of the Central Bank in relation to funds contributed by shareholders, head offices, disclosing the interest rate computation method for this assistance. |85|
Annual Report | 2002
Communication "A" 3752. CAMEX - 1 - 405. (09.30.02) As regards transfers from abroad and to foreign countries, the Central Bank provided for that, effective as of 10.01.02, whenever foreign currency income from abroad did not correspond to items bound to be settled in the Single Free Exchange Market, and the beneficiary instructs the funds to be deposited in a local bank account in foreign currency on its behalf, bank institutions authorized to operate in the exchange market should issue the corresponding document to record the purchase of foreign currency and the sale of bills for its deposit in the account of the beneficiary. Communication "A" 3756. CONAU - 1 - 506. (10.03.02) The Central Bank disclosed new Mean Accounting Record Values for Securities. Likewise, it repealed the computation base corresponding to the National Secured Loans, which should be made up of the Residue Nominal Value recorded in Caja de Valores S.A. plus interests accrued until 02.03.02, both in their original currency. Communication "A" 3757. OPASI - 2 - 320. (10.03.02) Communication "A" 3740, governing Canje II of financial system deposits, provided for by Decree 1836/02, was amended. In this sense, the computation base to exercise the option of the "National Government Bonds in US Dollars Libor 2006" was reformulated. In such respect, the Central Bank provided for that, the total amount received in Pesos on account of interests, converted to US Dollars at the exchange rate of $1.40 per US Dollar should not be deducted from the total nominal amount of the bond equivalent to the amount of the rescheduled deposit, before its conversion to Pesos. Furthermore, the Central Bank left without effect the requirements institutions should comply with in order to increase the amount payable in cash from $7,000 to $10,000 (whether for the exchange of the corresponding bonds or CEDROS), which provided for that said increase should not affect liquidity, nor should it prevent compliance with applicable rules and regulations in force. Communication "A" 3762. OPRAC -1 - 540. (10.07.02) The Central Bank issued resolutions related to Decrees 762/02 and 1242/02, active transactions and the application of the Salary Variation Coefficient (CVS). In addition, it determined that evidence should be supplied as regards the new conditions to which loans were be subject due to the application of the respective Decrees, the way in which the corresponding information was disclosed and, as the case may be, notices recorded in customers' files, and that the institutions should adopt, at their discretion, the documentary means they may deem necessary to protect their rights.
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Communication "A" 3778. OPASI - 2 - 321. (10.24.02) The Central Bank amended the rules and regulations governing cash settlement of CEDROS and of deposits exchanged for BODEN, exchanges of CEDROS and BODEN for Fixed Term Drafts in Pesos with option to convert them to foreign currency and exchange of CEDROS for BODEN 2013 in US Dollars with option to sell their coupons, this latter alternative being admitted for BODEN. Communication "A" 3784. OPASI - 2 - 322. (10.28.02) The BCRA fixed in 30 days, as of the date of this Circular Letter, the term to terminate transactions ascribable to transfers of rescheduled deposit certificates between institutions, only in the cases the institution receiving the funds would have been suspended pursuant to the provisions of section 49 of the Articles of Incorporation of the Central Bank and its assets and liabilities would have been transferred to other entities. Communication "B" 7564. (10.24.02) A series of regulatory interpretations regarding certain transactions for the calculation of set off to financial institutions provided for in Sections 28 and 29 of Decree 905/02 were informed. Communication "A" 3785. OPRAC - 1 - 541, LISOL - 1 - 388 and CONAU - 1 - 520. (10.29.02) The Central Bank amended the rules and regulations governing Securities Held in Investment Accounts and provided for the expiration of the suspension of subsection 3.2 of the aforementioned rules and regulations, related to the treatment of valuation differences, reason for which said regulations were again in full force as of January 2002. Furthermore, the Circular Letter provided for that National Government Bonds received by financial institutions within the framework of the regulations of sections 28 and 29 of Decree 905/02, "National Government Bonds in Pesos 2% Due 2007" and/or "National Government Bonds in US Dollars Libor 2012", could be recorded at their technical value. Institutions should not distribute cash dividends while using this system, except for the profit amount exceeding the difference between the recording value and the quotation value of the aforementioned bonds, once the appropriations set forth by the laws and regulations had been complied with. In such cases, subsection 3.2 related to treatment of valuation differences would not be applied. Communication "A" 3791. OPASI - 2 - 323. (11.01.02) Margins for cash withdrawals from restricted availability accounts were increased in the case of individuals. |87|
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In such regard, the Central Bank provided for that cash could be withdrawn from deposit accounts in amounts not exceeding the weekly limits of $500, whichever the account type, except for accounts to credit salary or pension payments and fixed term deposit accounts, with a maximum limit of $2,000 per calendar month. Communication "A" 3793. OPRAC - 1 - 542. (11.04.02) Due to Resolution 675/02 of the Secretariat of Small and Medium-sized Companies and Regional Development (SecretarĂa de la PequeĂąa y Mediana Empresa y Desarr ollo Regional), total annual sale values were updated, pursuant to the business sector, in order to determine the condition of micro, small or medium-sized company. Communication "A" 3797. OPASI - 2- 324. (11.07.02) Pursuant to the provisions of Decree 2167/02, the BCRA introduced modifications to the rules and regulations governing Deposit Rescheduling, in relation to the extension of the term to subscribe the Canje II of financial system deposits as of 12.12.02 for BODEN 2013 and as of 11.21.02 for "Fixed Term Drafts in Pesos" and those governing cash exchange of deposits up to $7,000 (which could be extended to $10,000). Furthermore, savers and investors who had subscribed Canje I (Decree 905/02), as well as those who had deposits originally denominated in Pesos were incorporated to Canje II (in cash). The scope of "beneficiaries" was extended through the option to subscribe BODEN 2005, incorporating investments made in shares of Mutual Funds and LEBAC with resources from trusts created by the Nation, the Provinces, the Municipalities and the Government of the City of Buenos Aires, with the purpose of making payments or financing public and infrastructure works. Communication "A" 3800. CONAU - 1 - 527 and RUNOR - 1 - 599. (11.12.02) The Central Bank granted financial institutions the option in order that, with the approval of the Board of Directors ad-referendum of the decision duly made by the Shareholders' Meeting or an equivalent body, they bear in advance the losses originated during the current year up to the concurrence of balances recorded in Retained Earnings with those in Difference of Non-realized Valuation. Communication "A" 3804. OPASI -2- 325. (11.15.02) The conditions applicable to the release of CEDROS for the purchase of new vehicles, or of vehicle adaptation commands and automatic transmission for national vehicles, intended for use by disabled people, were amended.
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Communication "A" 3805. LISOL - 1 - 389. (11.15.02) Taking into account Decree 2167/02, the BCRA decided to modify the determination of Bond Set Off to financial institutions by the conversion to Pesos of their assets and liabilities, originally disclosed in Communication "A" 3650. Communication "A" 3806. OPRAC - 1 - 543. (11.15.02) Amendments were issued in relation to the conversion to Pesos of balances as of 02.03.02 of financing related to foreign trade, in force as of 01.05.02, within the framework of restructurings provided for in Communications "A" 3507 and "A" 3561. In such respect, and among other issues, the concept of financing granted to exporters was introduced, replacing credits or transactions taken by the exporter, not only considering original disbursements, but also renewals and/or extensions and eventual liabilities assumed with regard to obligations to foreign banks to which foreign law applies. Communication "A" 3811. CAMEX - 1 - 410. (11.21.02) The BCRA replaced subsection c) of section 6 of Communication "A" 3473, related to capital asset imports and imports paid in advance. Communication "A" 3815. LISOL - 1 - 390. (11.21.02) It was provided that, in July and August 2002, in the case of debtors included in categories 2 and 3 with up to 62 and 121 days of delay in payment, respectively, both for the commercial portfolio as for the consumer portfolio, financial institutions could observe provisioning levels corresponding to the immediately previous category. Therefore, as of September 2002, general rules governing "Minimum requirements for noncollectibility risk" were applicable. Communication "A" 3820. CAMEX - 1 - 414. (11.25.02) It was determined that the issuance of private, financial and non-financial sector's debt instruments, denominated in foreign currency, and which principal and interest services were not exclusively payable in Pesos in the country, should be subscribed in foreign currency and the proceeds thereof settled in the Single Free Exchange Market.
Communication "A" 3824. REMON - 1 - 769 and OPRAC - 1- 544. (11.27.02) The Central Bank issued new measures related to minimum cash requirements and minimum application of resources from sight and term obligations in Pesos: |89|
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For the period December 2002/January 2003, the minimum cash requirement and integration and that of the "Minimum application of resources from sight and term obligations in Pesos" system should be observed above the mean of both months.
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Whenever there were a theoretical integration defficiency or an incrase in defficiency in the November/2002 position, recalculated to the rates in force during the DecemberJanuary period, the deduction of the minimum cash requirement in Pesos should be authorized, in the following positions for the terms stated:
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In the event of Fixed Term accounts, as of 12.01.02, the minimum cash requirement should be paid at a 14% rate and the required amounts should be applied towards the Minimum. Application of Resources from sight and term obligations in Pesos, resulting from applying the12% rate.
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As of 04.01.02, calculation of cash in foreign currency was admitted, temporarily, in institutions, in transit and in companies dedicated to the transportation of monies and securities for the purpose of daily minimum cash payments in foreign currency. As of 12.01.02, subsection 2.4 of Section 2 of the rules governing "Minimum cash requirements" related to the additional compensation was left without effect.
Communication "A" 3827. OPASI - 2 - 326 and RUNOR - 1 - 603. (11.29.02) According to what was set forth in Resolution 668/02 of the Ministry of Economy, the Central Bank eliminated restrictions on amounts that could be withdrawn from sight accounts and it therefore amended rules and regulations on "Term deposits and investments", "Savings deposits, payment of salaries, pension and special savings accounts", "Deposit rescheduling system", "Bank current account rules and regulations" and other provisions.
Communication "A" 3831. OPASI - 2 - 328 and RUNOR - 1 - 604. (12.11.02) Taking into account that the fund raising for bank current accounts can only be carried out in Pesos, the rules applicable thereto were amended, as well as those related to desk payment of checks provided for in rules governing "Prevention of money laundering and other illegal activities." |90|
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Communication "A" 3833. OPASI - 2 - 329. (12.13.02) By virtue of Resolution 743/02 of the Ministry of Economy -Canje II of financial system deposits-, the Central Bank amended rules governing the "Deposit Rescheduling System." In such respect, terms for exchange of CEDROS and BODEN for Fixed Term Deposit Drafts in Pesos with option to convert them to foreign currency were extended. The same happened with exchange of CEDROS for BODEN U$S 2013 with option to sell their coupons, this latter alternative being admitted for BODEN. Communication "A" 3835. OPASI - 2 - 331. (12.17.02) As set forth in Resolution 668/02 of the Ministry of Economy, in relation to the elimination of restrictions on deposit cash withdrawals, rules governing "Guarantees for intermediation in third party transactions" were amended. Communication "B" 7657. (12.24.02) As of 12.26.02, inclusive, US Dollar purchase and sale transactions on behalf of the Central Bank were suspended. Communication "A" 3843. CAMEX - 1 - 419. (12.26.02) As of 01.02.03, transfers abroad on account of financial debt capital service payments, due or to be due in the future, pertaining to non-financial private sector holders and on account of interest services, subject to certain conditions, were excepted from the prior authorization requirement by the BCRA. Communication "A" 3844. CAMEX -1- 420. (12.26.02) The maximum limit of the General Exchange Position (PGC) for financial institutions was set at 6% of the Accountable Equity Liability recorded at the end of November 2001, at the exchange rates applicable on such date, with a minimum equivalent to US$ 1,000,000 for banking institutions. Communication "A" 3845. CAMEX - 1 - 421. (12.26.02) The maximum limit for the purchase of foreign currency for certain purposes not subject to prior authorization by the BCRA was increased from US$ 100,000 to US$ 150,000 per calendar month, in the group of institutions authorized to operate in the exchange market, and payment of dividends and profits was included in such purposes.
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Communication "A" 3846. CAMEX -1- 422. (12.26.02) It was provided that, as of 01.02.03, importers could pay in advance 100% of capital assets purchased, in compliance with customs tariff positions imposed by the Secretary of Industry and Commerce, subject to certain conditions. Communication "A" 3847. CAMEX -1- 423. (12.26.02) The Central Bank allowed input and settlement of export collections to be made within the terms agreed upon with importers, as regards certain assets and subject to certain conditions. Communication "A" 3851. OPASI - 2 - 332. (12.30.02) The rules and regulations of Bank Current Accounts in relation to endorsement limitations were amended, and the effective period thereof was extended until 12.31.04.
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