By: André Jerusalem

The Central Bank of Brazil (BCB) has published new prudential rules applicable to payment institutions (“IP”), based on public consultation number 78, made available in November 2021.

Just like the latest innovations brought by the BC, this one is no different and aims at the same principles: agility, efficiency, competitiveness and bureaucratic unblocking.

Prudential rules are those that establish minimum requirements for financial institutions (“FIs”), aiming at risk management and minimum capital for the development of the activity. These rules contribute to ensuring that if the financial institution goes bankrupt, it does not affect the financial system as a whole.

With the emergence of large payment institutions, specific regulation of prudential rules was also necessary, as seen in financial institutions, so that with the new rules, the requirements now consider the entire conglomerate and not just the single legal entity, that is, all financial subsidiaries are also considered from a prudential perspective. Thus, according to the new rule, there are 3 (three) types of conglomerates:

• Type 1: prudential conglomerate led by a financial institution;
• Type 2: prudential conglomerate led by a payment institution and not integrated by a financial institution or another institution authorized to operate by the BC; and
• Type 3: prudential conglomerate led by a payment institution and integrated by a financial institution or another institution authorized to operate by the BC.

As a result of the definition of the types of conglomerates, there is an improvement in capital, since the minimum capital will be in accordance with the size of the conglomerate and the risks of each activity carried out. Precisely because of this differentiation, it is easier for new payment institutions to enter the market.

The new rules will come into effect from January 2023. However, full implementation will only take place from January 2025.