Agreement No. 009-2019 Modifying Article 2 of Agreement No. 006-2012 on Technical Accounting Standards for Banks in Panama

Republic of Panama Banking Superintendence AGREEMENT No. 009-2019 (of September 24, 2019) "By which Article 2 of Agreement No. 006-2012 on technical accounting standards applicable to banks established in Panama is modified"

THE BOARD OF DIRECTORS in the exercise of its legal powers, and

CONSIDERING:

That as a result of the issuance of Law Decree No. 2 of February 22, 2008, the Executive Branch prepared a systematic ordering in the form of a single text of Law Decree No. 9 of February 26, 1998, and all its modifications, which was approved through Executive Decree No. 52 of April 30, 2008, hereinafter the Banking Law;

That in accordance with the provisions of paragraphs 1 and 2 of Article 5 of the Banking Law, it is the objective of the Banking Superintendence to ensure that the solidity and efficiency of the banking system are maintained; as well as to strengthen and foster the favorable conditions for the development of the Republic of Panama as an international financial center;

That in accordance with paragraph 7 of Article 11 of the Banking Law, it is a technical attribute of the Board of Directors to establish accounting requirements regarding the financial information that banks must provide;

That in accordance with paragraph 8 of Article 11 of the Banking Law, it is a technical attribute of the Board of Directors to establish the general rules that banks must follow in their accounting;

That in accordance with paragraph 3 of Article 91 of the Banking Law, banks must send to the Superintendence, within the timeframe and in the manner determined by it, any information with the frequency determined by this Superintendence;

That International Financial Reporting Standards (IFRS) constitute a set of globally accepted, understandable, and high-quality standards based on clearly articulated principles;

That through Agreement No. 006-2012 of December 18, 2012, provisions on technical accounting standards applicable to banks established in Panama were issued;

That in accordance with Article 2 of Agreement No. 006-2012, the technical accounting standards used in the preparation of accounting records and the presentation of financial statements of regulated entities shall be exclusively the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), except as stated in Article 3 of said Agreement;

That in working sessions of this Board of Directors, the need and convenience of modifying Article 2 of the aforementioned Agreement No. 006-2012 has been manifested, in order to allow the bank holding company of banking groups that consolidate their operations in Panama and whose home supervisor is the Banking Superintendence, to present, with prior authorization of this Superintendence, their financial statements based on

Agreement No. 009-2019 Page 2 of 2 Generally Accepted Accounting Principles in the United States of America (US-GAAP), in order to promote and foster the development of the country as an international financial center.

AGREES:

ARTICLE 1. Article 2 of Agreement No. 006-2012 of December 18, 2012, is hereby amended as follows:

"ARTICLE 2. TECHNICAL ACCOUNTING STANDARDS. The technical accounting standards used in the preparation of accounting records and the presentation of financial statements of regulated entities shall be exclusively the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), except as stated in Article 3.

PARAGRAPH: In those cases where the characteristics of a banking group justify the bank holding company's use of Generally Accepted Accounting Principles in the United States of America (US-GAAP), the presentation of the financial statements of the bank holding company may, with prior authorization of the Banking Superintendence and based on a duly substantiated proposal, be carried out using this accounting standard. This last provision shall only be applicable to banking groups where, due to their legal structure, the Banking Superintendence constitutes the home supervisor."

ARTICLE 2. EFFECTIVENESS. This Agreement shall enter into force from its promulgation.

Given in the city of Panama, on the twenty-fourth (24) day of the month of September of two thousand nineteen (2019).

LET IT BE COMMUNICATED, PUBLISHED, AND COMPLIED WITH.

ACTING PRESIDENT, ACTING SECRETARY, Nicolás Ardito Barletta Luis Alberto La Rocca