Banking Regulation 2025

BRAZIL Law and Practice Contributed by: Thomas Gibello Gatti Magalhães, André Dágola Brostoline and Luisa Grespan Danhoni Neves, Magalhães & Zettel

• S1 – multiple, commercial, investment, exchange and savings banks that have a size equal to or greater than 10% of GDP or that carry out relevant international activity, regardless of the size of the institution; • S2 – multiple, commercial, investment, exchange and savings banks that have a size less than 10% and equal to or greater than 1% of GDP, and other institutions with a size equal to or greater than 1% of GDP; • S3 – institutions with a size less than 1% and equal to or greater than 0.1% of GDP; and • S4 – institutions with a size less than 0.1% of GDP. In this sense, CMN Resolution No 4,943/2021 deals with social and environmental risks, and also includes the observance of climate risks. The rule requires the identification, assessment, classification, measurement and establishment of mechanisms to monitor these risks, as well as the establishment of a management struc - ture and minimum prudential requirements to be observed for each type of risk. CMN Resolution No 4,944/2021 also refers to social, environmental and climate risks for insti - tutions classified in Segment S5 – ie, institutions of less than 0.1% of GDP that use a simplified optional methodology for calculating the mini - mum requirements of Reference Equity (PR), Level I and Principal Capital, except multiple, commercial, investment, foreign exchange and savings banks and institutions not subject to PR calculation. CMN Resolution No 4,945/2021 deals with the establishment of the Social, Environmental and Climate Responsibility Policy (PRSAC) by institu - tions in Segments S1, S2, S2, S4 and S5 author - ised to operate by BCB.

This rule establishes the need for institutions to establish and implement actions with a view to effectiveness and to strengthen governance and transparency requirements in relation to PRSAC and the actions implemented. To this end, PRSAC must be disclosed to the external public together with the actions that ensure its effec - tiveness, and must be implemented according to the profile of each institution, observing its business model, the nature of its operations and the complexity of its products, services, activi - ties and process, in addition to considering the institution’s strategic objectives and competi - tive conditions and the regulatory environment in which the institution operates. Regarding governance, the rule defines certain functions for different positions. For example, the approval and review of PRSAC is the respon - sibility of the board of directors, and shall be made at least every three years or when events considered relevant occur. A social, environmen - tal and climate responsibility committee, linked to the board of directors, is mandatory for S1 and S2 and optional for S3, S4 and S5; when not organised, the executive board shall assume the duties of said committee. Prudential conglomerates shall have a unified PRSAC. One of the participating institutions shall be given responsibility for the policy, and designate a responsible officer and create the committee. BCB Resolution No 139/2021 provides for the disclosure of the Social, Environmental and Cli - mate Risks and Opportunities Report (“GRSAC Report”) by the institutions authorised to oper - ate by BCB that fall under Segments S1, S2, S3 and S4.

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