Worldwide: Capital Adequacy/BASEL

On March 29, 2012, the Brazilian Monetary Council (Conselho Monetário Nacional – CMN) decided to amend the provisions of CMN Resolution No. 2723, of May 31, 2000 (CMN Res. 2723/2000), which sets forth detailed rules, conditions and procedures for installing dependencies abroad and for the direct or indirect equity interest in Brazil or abroad by financial institutions and other entities authorized to operate by the Central Bank of Brazil (Banco Central do Brasil – Bacen).

As already explained in several of our articles about the different changes introduced from time to time by the Brazilian government to the Tax on Exchange Transactions (Imposto sobre Operações de Crédito, Câmbio e Seguro, ou relativas a Títulos ou Valores Mobiliários - IOF), the IOF is a tax on credit and exchange transactions, insurance and securities assessed on the amount of bank loans and similar transactions, on the amount of foreign currency purchased or sold, on insurance premiums and t

For the second time this year, by means of Decree No. 7698, of March 9, 2012 (Decree 7698/2012), published in the Official Gazette of the Union of March 12, 2012, the Brazilian Federal Government decided to increase from three to five years the term of the foreign currency loans which are subject to the tax on exchange transactions (IOF) at the rate of 6%.