Agreement No. 012-2020 Modifying Article 19 and Annexes 1 and 2 of Agreement No. 4-2008 on Legal Liquidity Index Compliance

Republic of Panama Superintendencia de Bancos AGREEMENT No. 012-2020 (October 13, 2020) "By which Article 19 and Annexes 1 and 2 of Agreement No. 4-2008, which establishes new provisions for compliance with the legal liquidity index, are modified"

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

CONSIDERING:

That following the issuance of Decree-Law No. 2 of February 22, 2008, the Executive Branch prepared a systematic arrangement in the form of a single text of Decree-Law No. 9 of February 26, 1998, and all its modifications, which was approved by 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 Superintendencia de Bancos to ensure the maintenance of the solidity and efficiency of the banking system, 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 Article 11, section I, paragraph 5 of the Banking Law, it is a technical attribute of this Board of Directors to establish, within the administrative sphere, the interpretation and scope of legal or regulatory provisions in banking matters;

That by Agreement No. 4-2008 of July 24, 2008, and its modifications, this Superintendencia issued new provisions for compliance with the legal liquidity index;

That by Article 19 of Agreement No. 4-2008, the international agencies considered for the purposes of international risk ratings of instruments in foreign currency referred to in the aforementioned Agreement are established;

That risk rating agencies evaluate the intrinsic financial safety and solidity of the bank, with an independent, objective, and well-founded opinion on its current capacity to manage risks with third parties and on the solvency and prospects of the entity;

That in working sessions of this Board of Directors, the need and convenience of modifying Article 19 of Agreement No. 4-2008 has been manifested, in order to include a globally recognized and certified global rating agency that meets international risk evaluation standards.

AGREES:

ARTICLE 1. Article 19 of Agreement No. 4-2008 is hereby amended as follows:

ARTICLE 19. INTERNATIONAL RATING. For the purposes of international risk ratings of instruments in foreign currency referred to in this Agreement, those described in Annexes 1 and 2 shall be used, following as reference the nomenclature of the agencies Standard & Poor's, Moody's, Fitch, and Kroll Bond Rating Agency (KBRA).

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ARTICLE 2. Annexes 1 and 2 of Agreement No. 4-2008 are hereby amended as follows:

ANNEX 1 LONG-TERM INVESTMENT GRADE RATINGS MOODY’S Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 STANDARD & POOR'S AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- FITCH AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- KROLL BOND RATING AGENCY AAA AA+ AA AA- A+ A A- BBB+ BBB BBB-

LONG-TERM NON-INVESTMENT GRADE RATINGS MOODY’S Ba1 Ba2 Ba3 B1 B2 B3 Caa1 Caa2 Caa3 Ca C STANDARD & POOR'S BB+ BB BB- B+ B B- CCC+ CCC CCC- CC C D FITCH BB+ BB BB- B+ B B- CCC+ CCC CCC- CC C D KROLL BOND RATING AGENCY BB+ BB BB- B+ B B- CCC+ CCC CCC- CC C D

ANNEX 2 SHORT-TERM INVESTMENT GRADE RATINGS MOODY’S P-1 P-2 P-3 STANDARD & POOR'S A-1+ A-1 A-2 A-3 FITCH F-1+ F-1 F-2 F-3 KROLL BOND RATING AGENCY K1+ K1+ or K1 or K2 or K3 K3

SHORT-TERM NON-INVESTMENT GRADE RATINGS MOODY’S NP STANDARD & POOR'S B B-1, B-2, B-3 C D FITCH B C D KROLL BOND RATING AGENCY B C D

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ARTICLE 3. EFFECTIVE DATE. This Agreement shall enter into force from the date of its promulgation.

Given in the city of Panama, on the thirteenth (13) day of the month of October of two thousand twenty (2020).

NOTIFY, PUBLISH, AND COMPLY.

THE PRESIDENT THE SECRETARY Luis Alberto La Rocca Nicolás Ardito Barletta