BCB Amends Rules on Credit Risk Approach and Open Banking
The Central Bank of Brazil (BCB) published Resolution 121 to amends Circular No. 3,644, of March 4, 2013, regarding the procedure for calculating the capital requirement of exposures subject to credit risk under the standardized approach. BCB also published Resolution 114 and Resolution 117 on the implementation of open banking. All of these resolutions enter into force on the date of their publication, which is July 29, 2021 for Resolution 121, July 14, 2021 for Resolution 114 and July 21, 2021 for Resolution 117.
The change addressed in Resolution 121 on the capital requirements for the standardized approach to credit risk concerns the treatment of the risk-weighting factor applied to credits arising from temporary differences that may generate presumed credit under the Credit Incentive Program (PEC), created by Provisional Measure No. 1,057 dated July 06, 2021. The PEC aims to promote the performance of credit operations by BCB-authorized institutions, except credit cooperatives and consortium administrators, with micro entrepreneurs individuals, micro-enterprises, small businesses and rural producers, with annual gross revenue, calculated in the calendar year 2020, of up to BRL 4.8 million; in the case of a legal entity incorporated in 2020 or 2021, this limit will be proportional to the months in which it was active, respectively, in 2020 or 2021, or measured according to the criteria and policies of financial institutions, considering the invoicing equivalent to the period of twelve months. Provisional Measure No. 1,057, of 2021, determines that the aforementioned operations of credit must be contracted by December 31, 2021. It also clarifies that these operations will not be guaranteed by the federal government or by a public entity and that the credit risk is fully of the granting institutions (and that will not have any kind of contribution of public resources or interest rate equalization by the federal government). Financial institutions that adhere to the PEC as grantors of the credit operations may determine presumed credit, until December 31, 2026, in total amount limited to the lower of
- the gross book balance of credit operations granted under the PEC and the Working Capital Program for Business Preservation (CGPE), referred to in Provisional Measure No. 992, of July 16, 2020; and
- the accounting balance of credits arising from temporary differences. From this amount, the values of the Vote 168/2021–BCB, of July 27, 2021
Resolution 114 on open banking updates the timeline for implementation of open banking. The update relates to the postponement, to August 13, 2021 (from July 15, 2021), of the beginning of the implementation of the application programming interfaces (APIs) for sharing customer registration and transactional data as well as the mechanism for handling and resolving disputes between institutions participating in the scope of the governance structure of open banking. Resolution 114 amends Resolution 109 dated June 24, 2021, which updated the schedules of submission of convention and implementation of the sharing of data and services of the scope of open banking and replaced the terms defined in Articles 47 and 55 of the Joint Resolution No. 1 of May 04, 2020. BCB also published Resolution 117, which amends Resolution 32 establishing the technical requirements and operational procedures for the implementation of the "Open Financial System" in the country.
Related Links (in Portuguese)
- Press Release on Open Banking
- Resolution 114 on Open Banking
- Explanatory Memorandum on Resolution 114 (PDF)
- Resolution 117 on Open Banking
- Resolution 121 on Credit Risk Approach
- Explanatory Memorandum for Resolution 121 (PDF)
Keywords: Americas, Brazil, Banking, Basel, Regulatory Capital, Standardized Approach, Credit Risk, Resolution 121, Open Banking, API, BCB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
EBA Publishes Results of 2021 Stress Test Exercise for BanksRelated Articles
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
