The Argentine Central Bank Adopts Emergency Measures for the Lockdown

The Argentine Central Bank (Banco Central de la República Argentina - "BCRA") through Communique "A” 6942 ("Communique 6942") dated March 20, 2020 established certain exceptional measures for banking and foreign exchange transactions during the of mandatory social isolation period provided by Decree No. 297/2020. Decrees No. 325/2020 and 355/2020 extended the validity of Decree No. 297/2020 through April 26, 2020.

By means of Administrative Decision No. 490/2020, the chief of staff expanded upon the list of activities and services exempted from complying with the Mandatory Isolation Regime, provided for in Section 6 of Decree No. 297/2020, including, among others, banking institutions with customer service, to be provided exclusively through appointment scheduling.

 

I.          BCRA’s provisions in relation to the Mandatory Isolation Regime.

 

Communique 6942 established the regulatory framework to be applied during the Mandatory Isolation Regime. Initially, it established provisions to be implemented since March 20, 2020 through March 31, 2020. Nonetheless, pursuant Communique "A" 6949 ("Communique 6949") and Communique "A" 6958 ("Communique 6958"), given the extent of the Mandatory Isolation Regime, the validity of certain provisions was respectively renewed until April 12, 2020, and April 17, 2020, while other provisions were amended. Furthermore, the BCRA issued certain additional provisions to regulate the period of compulsory social isolation:

 

1. Business closure of retail financial centers of financial and foreign exchange institutions. Pursuant Communique 6942, financial and foreign exchange institutions were not able to provide customer service, to the general public, from their retail financial centers until April 12, 2020, as a result of the term extension established by means of Communique 6949.

 

However, pursuant to Communique 6949, this provision did not apply as of April 3, 2020 to client service granted by financial institutions to beneficiaries of: i) retirement pensions; ii) pensions that are part of the Argentine Integrated Social Security System (Sistema Integrado Previsional Argentino – “SIPA”); iii) pensions whose administrative entity corresponds to provincial jurisdictions or to the City of Buenos Aires; and/or iv) benefits, plans or aid programs paid by the National Social Security Administration (Administración Nacional de la Seguridad Social – “ANSES”) or any other payment administrator.

 

Communique 6958 established that, as of April 13, 2020 and through April 17, 2020, financial institutions must open their retail financial centers for customer service in general, except for bank counter service, according to a schedule organized by the last digit of your ID number or verification digit of the Company’s tax ID, with a  previously scheduled appointment with the financial institutions through their enabled electronic means (e.g. home banking, telephone line or email). Pension beneficiaries are exempted from requesting an appointment but will be subject to the schedules established by ANSES or the corresponding administrative entity.

 

Client service will be granted every banking day, increasing the usual working hours by 2 hours, according to the applicable jurisdiction, and must comply with strict sanitary regulations for health preservation of customers and bank workers, guaranteeing the latter all sanitary and cleaning elements required in order to carry out their task and comply with the interpersonal safety distances stipulated by the corresponding sanitary authority.

 

Institutions that issue credit and purchase cards and other credit providers that do not qualify as financial institutions, must also open their retail financial centers for customer service, as of April 13, 2020 and through April 17, 2020, under the same provisions established for financial institutions, with the exception that pension beneficiaries must previously schedule an appointment.

 

2. Business operations of financial institutions. By means of Communique 6942, from March 20, 2020 through April 12, 2020, financial institutions had to:

 

(a) Continue to provide the services already provided remotely, such as: setting up term loans, granting financing, and services related to payment systems.

 

Communique “A” 6944 (“Communique 6944”) dated March 24, 2020 expanded remote operations in order to include allocations of cash deposit made through ATMs, self-service terminals, cash-in-transit companies, deposit mailboxes and any other agreed means of cash deposits of larger amounts made by clients included in subsections 11, 18 and 23 of section 6 of Decree No. 297/2020 of the National Executive Branch. The clients included in subsections 11, 18 and 23 of section 6 of Decree No. 297/2020 of the National Executive Branch are: (i) wholesale and retail supermarkets and proximity retailers, pharmacies, hardware stores, veterinaries, provision of gas cylinders (subsection 11), (ii) public transport, transportation of merchandise, oil, fuels and LPG (subsection 18), and (iii) operation and maintenance of oil and gas fields, oil and gas treatment and/or refining plants, transportation and distribution of electric energy, liquid fuels, oil and gas, fuel filling stations and electric power generators (subsection 23).

 

(b) Adopt the necessary measures, including human resources, to guarantee sufficient provision of funds at ATMs and the continuity of operations related to the cash extractions at non-bank correspondents. The BCRA had to guarantee cash provision for this purpose.

 

3. Extension of maturities of bank financing. Pursuant to Communique 6942, financial institutions’ maturities registered between March 20, 2020 through March 31, 2020, were deferred until April 1, 2020.

 

In addition, pursuant to Communique 6949, the BCRA established that unpaid balances of credits granted by financial institutions, whose installments are due between April 1, 2020, through June 30, 2020, must be automatically refinanced for at least one year with a 3-month grace period in 9 monthly installments, equal and consecutive, with only compensatory interest accruing, and no other surcharge, which may not exceed the nominal annual rate of 43%.

 

4. Suspension of electronic bank clearance. Communique 6942 established that between March 20, 2020 through March 31, 2020, there would be no electronic bank clearance, and that clearing sessions would resume on April 1, 2020.

 

However, Communique 6944 amended Communique 6942 in this regard, reducing the suspension period until March 26, 2020. Thus, between March 20, 2020 through March 25, 2020 there was no electronic bank clearance, and clearing sessions resumed on March 26, 2020. This period of days will not count towards the 30-day period expiration term for the presentation of checks.

 

5. Remote transactions within the foreign exchange market. Financial and foreign exchange institutions were able to operate remotely, in the foreign exchange market, among themselves and with their clients, from March 20, 2020, through April 12, 2020.

 

Subsequently, Communique 6958 established that foreign exchange institutions will not be able to open their branches for customer service for an indefinite period, although they will be able to operate remotely among themselves, with other financial institutions and clients within the foreign exchange market.

 

6. Continuity of the wholesale exchange and LELIQ auctions. The BCRA must guarantee the operation, through the Electronic Operations Systems (Sistema de Operaciones Electrónicas – “SIOPEL”), of wholesale exchange operations and of the auction of Argentine Liquidity Bills (Letras de Liquidez del BCRA – “LELIQ”).

 

7. Continuity of the means of payment operation. From March 20, 2020, through April 12, 2020, the Chambers of Electronic Clearing, the Electronic Payment System, the ATM and electronic funds transfer networks, the credit and debit card administrators, the acquirers and processors of electronic means of payment, payment service providers, as well as any related providers and any other market infrastructure necessary for the normal provision of services by financial institutions and payment systems remained operational.

 

8. Remote operation of stock markets. From March 20, 2020, through April 12, 2020, the remote operation of stock exchanges and capital markets authorized by the National Securities Commission (Comisión Nacional de Valores - "CNV"), the Argentine Security Depository Service (Caja de Valores) and the capital market agents registered with the CNV, was allowed.

 

9. Reception of cash. Financial institutions must adopt the necessary measures in order to enable deposit mailboxes and a cash reception/extraction system for larger amounts in all its branches, according to the terms agreed with their customers, without the need of previously scheduling an appointment.

 

Other communiques by the BCRA in relation with the Mandatory Isolation Regime.

 

Likewise, the BCRA has issued other complementary regulations related to the health emergency declaration and its financial consequences:

 

1. Suspension of commissions for the use of ATMs. Communique “A” 6963 provided that until June 30, 2020, financial entities may not charge fees or commissions for operations (deposits, withdrawals, queries, etc.) performed through all automated teller machines enabled and operated by them at a national level, without amount limitations -other than those expressly agreed for security reasons and/or resulting from operational restrictions of the equipment- number of withdrawals limitations, or any distinction between clients and non-clients, regardless of the type of sigh deposit account through which the corresponding operation would be carried out. Financial institutions must allow all people to extract amounts that, at a minimum, reach the sum of ARS15,000 (accumulated daily), regardless of whether they are clients or not of the financial institution that manages the ATM or its network.

 

2. Flexibilization of criteria to qualify debtors. The BCRA, by means of Communique “A” 6938, dated March 19, 2020, introduced certain transitional criteria for the classification of debtors that will remain applicable through September 30, 2020. Primarily, it provides that financial and any other entities bound by the amended and restated text of the “Classification of Debtors” by the BCRA, must increase by 60 days the allowed periods of default for levels 1., 2. and 3. (debtors with the greatest credit quality) for both the commercial and consumer or housing portfolios.

 

3. Limitations on interest collection. Communique 6949 established that unpaid balances corresponding to maturities of credit relief granted by financial institutions, that occur from April 1, 2020 until June 30, 2020, may only accrue the compensatory interest at the contractually agreed rate. Regarding unpaid balances on financings granted by financial institutions, excluding credit cards, that operate during the aforementioned period, the financial institution must incorporate said instalment to the month that comes about after the end of the credit term, taking into account the accrual of the compensatory interest rate. In the case of financings from financial institutions under the credit card regime, due dates for payments on lingering credit card account statements that occur from April 1, 2020 through April 12, 2020 may be paid by the customers on the April 13, 2020, by the same amount reflected in the account statements without incurring in any surcharge. Credit assistance granted to the financial sector is excluded from said provision. It is recalled that both the direct debit and the automatic debit payments in the financial institution can be reversed at the request of the clients within 30 calendar days from the date of the debit and the return of the funds must operate within 3 business days of the request. As of April 1, 2020, the interest rate on unpaid balances of financing on lingering credit card account statements may not exceed the annual nominal rate of 49%.

 

Communique "A" 6964 established that unpaid balances, corresponding to maturities of financings granted by credit card financial institutions, that occur from April 13, 2020 through April 30, 2020, must be automatically refinanced, for at least a one-year term, with a 3-month grace period, and 9 equal, consecutive and monthly installments, with only compensatory interest accrual, which may not exceed the nominal annual rate of 43%, and no other surcharge. These refinanced balances may be prepaid, totally or partially, at any time and at no cost, except for the compensatory interest accrued up to the prepayment, at the client’s request.

 

4. Suspension of closure of bank accounts. Extension of the term to present checks for collection. The Executive Power by Necessity and Urgency Decree No. 312/2020 suspended until April 30, inclusive: (a) the obligation to close bank accounts and to apply fines and disqualify the issuer of a check rejected due to lack of funds, lack of authorization to overdraft or formal defects, provided in Section 1 of Law N° 25,730; and (b) the obligation established in Section 12 of Law N° 14.499, applicable to financial institutions which require that employers, before the granting of a credit, show evidence or a sworn statement that they do not owe any amount in social contributions or that, having entered into a moratorium plan, they are performing it. The Executive Power can extend the term of the suspension as long as the emergency situation continues.

 

The BCRA by Communique “A” 6963 decided to extend for 30 additional days the term for the presentation for collection of checks -whether common or differed, issued in Argentina or abroad- which end during the suspension of Section 1 of Law N° 25,730 decided by the Executive Power. In addition, it authorizes to present for collection for a second time those checks rejected due to lack of funds. This provision does not apply to checks issued electronically or ECHEQ.

 

5. Incentives for MiSMEs. The BCRA by Communique “A” 6946 and Communique “A” 6965 established certain regulatory incentives for financial institutions that grant financings to Micro, Small and Medium Enterprises, as defined by the regulations, at an annual nominal interest rate of 24 %, which are allocated at least in 50 % to working capital lines, such as payment of salaries and differed checks.