Regulatory Alerts2025-03-05 | CDMF-VII-5-25Norm Reforming Annex 1 of the Standard on Determining the Risk Level of Institutions in the Deposit Guarantee System
The Monetary and Financial Board issued Resolution CDMF-VII-5-25 to update the risk classification criteria for financial institutions within the Deposit Guarantee System. The resolution amends Annex 1 of the existing risk determination standard to align internal risk categories with the long-term issuer ratings of recognized international and local rating agencies. This regulatory change transfers authority from previous banking supervisors to the Board and establishes a framework for the Superintendent to update equivalency tables as rating methodologies evolve.
Page 1 of 3 RESOLUTION CDMF-VII-5-25 Dated March 5, 2025
NORM REFORMING ANNEX 1 OF THE STANDARD ON THE DETERMINATION OF THE RISK LEVEL OF INSTITUTIONS OF THE DEPOSIT GUARANTEE SYSTEM
The Monetary and Financial Board,
CONSIDERING
I
That on September 3, 2008, the Board of Directors of the Superintendence of Banks and Other Financial Institutions approved the "Standard on the Determination of the Risk Level of Institutions of the Deposit Guarantee System," contained in Resolution No. CD-SIBOIF-550-3-SEP3-2008, published in La Gaceta, Official Journal No. 186, on September 29, 2008, which aims to establish the criteria for determining the risk level of supervised financial institutions that are part of the Deposit Guarantee System, in accordance with the authority established in Article 18 of Law No. 551, Law of the Deposit Guarantee System, reformed by Law No. 1236, "Law of Reforms and Additions to Law No. 551, Law of the Deposit Guarantee System," published in La Gaceta, Official Journal No. 30 on February 17, 2025.
II
That Article 156 of Law No. 1232, "Law of Administration of the Monetary and Financial System," published in La Gaceta, Official Journal No. 241, on December 30, 2024, establishes that "...all those faculties, competencies, powers, attributions, and duties established in other laws, prior to the effectiveness of this Law, attributed to the Board of Directors of the Central Bank and the Board of Directors of the Superintendence of Banks..." are transferred to the Monetary and Financial Board.
III
That, based on the aforementioned faculties, it is necessary to reform Annex 1 of the standard referred to in the first consideration of this resolution, in order to update the table of risk rating categories, adapting them to the methodological changes made by rating agencies.
In exercise of its faculties,
HAS ISSUED
The following,
NORM REFORMING ANNEX 1 OF THE STANDARD ON THE DETERMINATION OF THE RISK LEVEL OF INSTITUTIONS OF THE DEPOSIT GUARANTEE SYSTEM
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FIRST: Annex 1 of the Standard on the Determination of the Risk Level of Institutions of the Deposit Guarantee System, contained in Resolution No. CD-SIBOIF-550-3-SEP3-2008, of September 3, 2008, published in La Gaceta, Official Journal No. 186, of September 29, 2008, is hereby reformed, which shall read as follows:
"Annex 1. TABLE OF EQUIVALENCES
The risk rating of the financial institution must be made without consideration of country risk or the sovereign risk of the Central Government of the country, that is, a local rating.
To determine the risk category, the long-term issuer rating shall be used according to the following equivalency table:
| Rating Agencies | Risk Category Equivalency |
|---|---|
| Category 1<br>Low Risk | |
| Category 2<br>Normal Risk | |
| Category 3<br>Medium Risk | |
| Category 4<br>High Risk | |
| Fitch IBCA | Between AAA and AA- |
| Moody's Investor Services | Aaa and Aa3 |
| Standard & Poor's | AAA and AA- |
| Dominion Bond Rating | AAA and AA- |
| Centromericana Risk Rating Society, S.A. (Moody's Local) | AAA and AA- |
| Pacific Credit Rating, S.A. de C.V. | AAA and AA- |
| Kroll Bond Rating Agency, Inc. | AAA and AA- |
The Superintendent may update the above table in case of new authorized and registered risk rating societies in the registry kept by the Superintendence for these purposes, establishing the link between the rating society's scale and the corresponding risk category. Likewise, it may be updated when new internationally recognized risk rating agencies are determined, or in case these entities modify their risk rating nomenclatures; which shall be reported to the Monetary and Financial Board prior to the notification made to financial institutions via circular."
Page 3 of 3
SECOND: This standard shall enter into effect upon notification by the Superintendence of Banks and Other Financial Institutions, without prejudice to its subsequent publication in La Gaceta, Official Journal.
(f) legible, Ovidio Reyes R. President of the Board of Directors; (f) illegible, Luis Ángel Montenegro Espinoza, Vice President of the Board of Directors; (f) illegible, Bruno Gallardo, Minister of Finance, Proprietary Member; (f) illegible, Roberto Rivas, Non-executive Proprietary Member; (f) illegible, Hugo Ortega, Non-executive Proprietary Member.
The undersigned Ruth Elizabeth Rojas Mercado, Secretary of the Monetary and Financial Board, certifies that it conforms to its original, which was duly compared.