Amendments to the Foreign Exchange Holdings Regime of Financial Institutions

On February 4, 2014, the Central Bank of Argentina (the “Central Bank”) issued Communication “A” 5536 and modified the scope of the overall net position of foreign exchange.
In particular, regarding the positive overall net position of foreign exchange, Communication “A” 5536 establishes that the general limit of the monthly average of daily balances converted into Argentine pesos at the reference exchange rate cannot be higher than the lesser of either (i) 30% of the bank’s net worth (responsabilidad patrimonial computable) calculated as of the prior month, or (ii) the liquid assets of the institution (the “Limit”). The Limit shall be increased in an amount equivalent to the growth of the credit lines granted by non-Argentine residents and transferred through the domestic foreign exchange market, experienced between January 2014 and the relevant month.
Moreover, Communication “A” 5536 establishes a specific limit for the positive overall net term position of foreign exchange, which cannot be higher than 10% of the bank’s net worth (responsabilidad patrimonial computable) calculated as of the prior month.
Lastly, Communication “A” 5536 stated that until April 30, 2014 the amount equivalent to a proportion of the difference between the overall net position of foreign exchange in cash, i.e., the difference between the overall net position of foreign exchange and the position at the end of January 2014 and the equivalent of the lesser of either (i) 30% of the bank’s net worth (responsabilidad patrimonial computable) as of December 2013 or (ii) the liquid assets of the entity, shall not be considered a breach to the Limit. The proportions, from February to April, shall be 75%, 50% and 25%, respectively, applied to the difference of January mentioned above. This regime only applies to financial institutions which as of January 2014 had net positions of foreign exchange higher than the limits set forth above.