Banking, Financial Market and Fintechs Newsletter no1

NEWS AND ALERTS

Bill regulating virtual assets is approved by the Senate and advances to the House of Representatives 

On April 26, 2022, the Senate approved Bill (“PL”) 4,401/2021, which regulates financial transactions with virtual assets in Brazil. The Bill included aspects contemplated in other bills concerning the same subject, such as Bill No 3,825/2019; 3,949/2019, and 4,207/2020.  

The Bill aims to set guidelines that will establish relevant regulatory frameworks for infra-legal regulation, consumer protection, fight against financial crimes, and promoting transparency in virtual asset transactions.  

As per the Bill, the Executive Branch to define which Federal Public Administration entity or body will be responsible for regulating the operation and oversight of virtual asset service providers.  

The approved text makes room for the development of “green mining”, by determining the reduction, until December 31, 2029, of the IPI, II, PIS and COFINS rates applicable to operations related to the import, industrialization or commercialization of machines (hardware) and computing tools (software) destined to enterprises that use, in their activities, 100% of the electricity from renewable sources and that neutralize 100% of the greenhouse gas emissions from these activities.  

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BACEN PROPOSES PUBLIC CONSULTATION ON THE NEW RULES FOR THE FOREIGN EXCHANGE MARKET   

The Central Bank of Brazil (“BACEN”) has published the Notice of Public Consultation that releases proposed rules intended to regulate the new legal framework of the foreign exchange market. 

 According to BACEN, the proposals are aligned with the purposes of Law 14,286/2021, which aims to modernize, simplify, and provide legal security to the foreign exchange market, considering international standards and practices as well as seeking to improve the business environment in Brazil and provide a greater insertion of Brazilian companies in international markets.  

BACEN has not addressed the current rules on foreign currency accounts held in Brazil, but promises to announce future proposals for regulations concerning foreign capital in the country (FDI, credit operations and investments in the financial and capital markets, and Brazilian capital abroad).  

It is expected that, from 2023 onwards, additional topics will be addressed in new proposals, including the improvement of interbank foreign exchange market rules, private credit compensation, estimated deadlines for operations in the foreign exchange market and provision for payment in foreign currency for obligations enforceable in the national territory.  

Click here to access Notice of Public Consultation. 

 

The Central Bank personnel are still on strike and some deadlines are suspended 

BACEN’s servants resumed their strike as of May 3, 2022, for an indefinite period, since there was no agreement on a salary adjustment. The strike started on April 1, 2022, and has been affecting certain activities of the institution, such as release of selected economic indicators and the fulfillment of specific deadlines (BCB Normative Rules No. 278/2022 and No. 279/2022).  

 

Legal Framework of Collateral is pending vote by the House of Representatives 

Bill No. 4,188/2021, which deals with the Legal Framework of Collateral and provides for the Collateral Management Institutions (IGG), should be voted soon.  

Quebra de Página 

The Bill aims to facilitate the supply of credit by means of measures that include (i) the use of an asset under a mortgage or collateral structure on a revolving mechanism in such a manner that the debtor can take out successive new loans, (ii) amendment of rules for home financing and (ii) authorization for the establishment of private collateral management institutions. 

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Ministry of Economy announces implementation of the Brazil Entrepreneur Credit Program 

On April 24, 2022, the Ministry of Economy announced the implementation of the Brazil Entrepreneur Credit Program. The Program is composed of a set of measures intended to provide credit access to entrepreneurs of business of various sizes, to an amount of approximately BRL 100 billion. One of these measures is Provisional Measure 1,114/2022, known as the Credit Provisional Measure, whose rules amend the provisions of the Popular Housing Guarantee Fund (FGHab), the Guarantee Fund for Credit Risk for Micro, Small and Medium Enterprises, and the Guarantee Fund for the Emergency Program for Credit Access (Peac), in order to facilitate the use of these funds to cover the default of companies that get credit, which speeds up the release of credit by banks.  

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ALSO CHECK OUT: STJ | BACEN & CMN | BNDES

 

The Superior Court of Justice (“STJ”)

STJ establishes that the discount limits of ordinary loans in bank accounts is not subject to consigned credit limits 

The Second District Court of the Superior Court of Justice (“STJ”) has defined, under the proceedings for repetitive appeals (Topic 1,085), that the discount of ordinary bank loan installments from a current account, even when used to receive wages, is lawful, provided that such discount is previously authorized by the borrower and for as long as such authorization lasts. Therefore, the restriction provided for in article 1, paragraph 1, of Law 10,820/2003, which regulates payroll consigned loans, is not applicable. 

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STJ lifts suspension of proceedings on debtor notification in Chattel Mortgage Agreement 

The Second District Court of the Superior Court of Justice (“STJ”) decided to lift the nationwide suspension of proceedings related to Repetitive Topic 1,132 on the notification of the debtor in a Chattel Mortgage Agreement. According to the Brazilian Federation of Banks (Febraban), the previous measure of suspension in these cases was indiscriminate and presented diverging opinions in the courts of origin. The ministers considered the measure necessary to avoid misinterpretations in ordinary courts and to prevent the loss of rights. (Special Appeal (“REsp.”) 1,951,662 and REsp. 1,951,888) 

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STJ ratifies the opinion that the financial institution has the burden of proof concerning the verification of a signature’s authenticity  

The STJ Department of Jurisprudence has updated the database of Repetitive Topics and Assumption of Authority Violations (“IACs”) Organized by Subject, including information about a qualified precedent on the verification of a signature’s authenticity in a bank agreement. The Motion for Clarification in REsp 1,846,649 corrects a material error in the judgment of REsp 1,846,649 and ratifies the opinion that the financial institution has the burden of proof to prove the authenticity of a signature in a bank agreement attached to the lawsuit by the institution itself. 

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ALSO CHECK OUT: NEWS AND ALERTS | BACEN & CMN | BNDES

 

Central Bank of Brazil (“BACEN”) and the National Monetary Council (“CMN”)

CMN Resolution No. 4,994/2022 – Amendments to Pension Funds Regulation 

Resolution No. 4,994/2022, published on March 24, 2022, entered into force on May 2, 2022, when the new investment rules for closed supplementary pension fund entities came into effect, in addition to the guidelines for application of the resources of the plans managed by them. The new rule: (i) excludes information on “customers and suppliers” from the investment policy; (ii) enables the purchasing of external federal public debt securities directly; (iii) classifies Brazilian Depositary Receipts (BDR) of Exchange Traded Fund (EFT) as a domestic asset; and (iv) adapts the terminology used, among other changes. One of the main amendments is the waiving of requirements, present in the previous rule, for the collection of performance taxes to be carried out by managed portfolios and investment funds that are invested assets of a pension fund. The new Resolution only refers to the rules established by the CVM.  

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Joint Resolution No. 4/2022 – Progress in the Implementation of Open Finance procedures 

Joint Resolution No. 4/2022 provides for the gradual implementation of Open Finance procedures, which calls for the integration of institutions’ financial services and facilitates public access to financial operations, products, and services. Among the most important amendments are (i) the amendment to Joint Resolution No. 1/2020, which adds a provision conferring reciprocity concerning the purpose of interoperability with the system, addressed in CNSP Resolution No. 415/2021; (ii) the amendment to the current definition of payment initiation service; (iii) the inclusion of a provision allowing confederations or central cooperatives to be in charge of making their affiliates’ information available; (iv) the inclusion of a provision establishing criteria for the Central Bank of Brazil to waive mandatory participation of institutions in Open Finance; and (v) the inclusion of a provision that expressly prohibits the establishment of mechanisms or systems that centralize client information within the scope of Open Finance, among others.  

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BCB Normative Instruction No. 278/2022 and No. 279/2022 – Suspension of BACEN deadlines 

BCB Normative Rule No. 278/2022 temporarily suspends the deadlines to which applicants were subject in the proceedings for opening Bank Reserves Accounts, Settlement Accounts and Instant Payment Accounts (IP Account), and for direct participation in the Reserves Transfer System (STR) and the Instant Payment System (SPI).. In turn, BCB Normative Rule BCB No. 279 temporarily suspends the deadlines to which applicants are subject in Pix application proceedings. Both rules remain in force until otherwise provided for in the legislation. 

 

Resolution BCB No. 225/2022 – Consolidation of rules that govern the issuance of Secured Real Estate Bills 

BCB Resolution No. 225/2022 aims to regulate, in a single regulatory act, aspects under the authority of BACEN concerning the Secured Real Estate Credit Bills (“LIG”). Previously, the rules regarding the issuance of LIGs were consolidated in Circulars No. 3.872/2017; No. 3.891/2018, and No. 3.895/2018. The Resolution provides for the authorization to carry out the role of fiduciary (trustee) in the issuance of LIGs, on thein proceedings and information required for the deposit of LIGs, for the registration or deposit of the assets comprising the asset portfolio, and on the provision of information to investors by institutions that issue LIGs.  

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ALSO CHECK OUT: NEWS AND ALERTS | STJ | BNDES

 

Brazilian National Bank for Economic and Social Development (“BNDES”)

BNDES makes permanent credit product that strengthens financing for supply chains 

The BNDES decided to make permanent a credit product created in the first year of the pandemic, which allows suppliers to access resources at lower rates through larger companies, called anchor companies. Within this framework, the anchor company contracts direct credit from the BNDES and allocates resources to micro, small, and medium-sized companies (MSMEs) in its chain (anchor companies). These companies don’t earn profits or remuneration for the risk, which gives them access to credit at a more appealing interest rate. 

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Government approves Law 14,336/22, which reopens the contracting lines of credit for the 2021/2022 Plano Safra, previously suspended by the BNDES 

The BNDES had suspended procedures to request new financing within the scope of the costing for the National Program for Sustainable Family Farming (Pronaf), due to the shortage of available resources for the 2021/22 Plano Safra. The modalities remained suspended from February 07 to April 29, 2022, by determination of the National Treasury. However, with the approval of Law 14,336/22, derived from Bill 1/2022, the latter approved by the Brazilian National Congress on April 28, contracting of rural financing through equivalent resources will be reopened.   

 

BNDES concludes first coordination of public offering of debentures 

BNDES has concluded its first coordination of public offering of debentures. The operation was carried out on behalf of RDVE Subholding, a company held by the Casa dos Ventos group, involving the amount of BRL 430 million. The purpose is to raise funds for the conclusion of four of the eight wind farms that constitute the Rio do Vento Wind Complex, in the municipalities of Caiçara do Rio do Vento, Lajes and São Tomé, in the state of Rio Grande do Norte. The BNDES collaborated with BTG Pactual (leader) and Itaú BB, in structuring the placement of debentures, and coordinating the issuance, having offered, additionally, a placement guarantee in an amount corresponding to 20% of the volume of the debentures public offering.  

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BNDES releases public notice for “Blended Finance”, a hybrid financial solution to encourage socio-environmental projects 

The initiative known as “Blended Finance” will support urban development, forest bioeconomy, and circular economy projects, gathering different sources of funding and  financial instruments. The Bank’s approach is to select financial structures capable of drawing different types of investors that can enable economic growth, consequently encouraging projects and companies that lack access to more complete and impactful financial solutions, such as small cooperatives, projects for the development of underprivileged communities, or solid waste recyclers. BNDES will disburse up to BRL 90 million in non-reimbursable resources for the selected projects, which will be responsible for seeking to raise, from third parties, at least another BRL 3 for every BRL 1 contributed by the Bank, which would result in about BRL 400 million in support for projects with a strong socio-environmental impact and that meet the Environmental, Social, and Governance (“ESG”) parameters.   

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BNDES approves financing conditioned to a greenhouse gas inventory 

The BNDES approved, for the first time, an operation whose counterpart will be a public commitment to carry out an inventory proceeding of greenhouse gases. The financing, in the amount of up to BRL 32 million, will be granted to the Cipalam Group, within the scope of BNDES’s ESG Credit Program, aligned with the “linked-loan” concept, which offers more attractive financial conditions to clients that can prove improvements in ESG indicators.  

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ALSO CHECK OUT: NEWS AND ALERTS | STJ | BACEN & CMN