Technical Standards on Opening, Operation, and Closure of Branches of Financial Entities

CNBCR-11/2024 NRP-84 TECHNICAL STANDARDS ON OPENING, OPERATION, AND CLOSURE OF BRANCHES OF FINANCIAL ENTITIES Approval: 12/19/2024 Effective Date: 01/03/2025 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 1 of 14

THE NORMS COMMITTEE OF THE CENTRAL RESERVE BANK OF EL SALVADOR,

CONSIDERING: I. That Article 22, first paragraph, of the Banks Law establishes that banks must inform the Superintendent about each project for opening branches in the country that they decide to undertake. II. That Article 22, fourth paragraph, of the Banks Law establishes that, in the case of branch closures, banks must notify the Superintendence and the public, at least sixty days in advance. III. That Article 25, first paragraph, of the Banks Law establishes that banks are institutions of mandatory operation. No bank may suspend or terminate its operations without prior authorization from the Superintendence. IV. That Article 26, first paragraph, of the Banks Law establishes that banks constituted under foreign laws that propose to establish branches in the country to carry out banking operations through them must obtain prior authorization from the Superintendence. V. That Article 27 of the Banks Law establishes the requirements that foreign banks must observe when proposing to request from the Superintendence of the Financial System the authorization referred to in Article 26 of the same Law. VI. That Article 29, third paragraph, of the Banks Law establishes that the provisions in Articles 21 and 22 of said Law shall apply, where pertinent, to foreign banks authorized to operate in the country. VII. That Article 11, first paragraph, of the Law on Cooperative Banks and Savings and Credit Societies establishes that cooperatives must inform the Superintendent about each project for opening branches in the country. VIII. That Article 11, fourth paragraph, of the Law on Cooperative Banks and Savings and Credit Societies establishes that, in the case of branch closures, cooperatives must notify the Superintendence of the Financial System and the public, at least thirty days in advance. (1) IX. That Article 14 of the Law on Cooperative Banks and Savings and Credit Societies establishes that cooperatives are institutions of mandatory operation. No cooperative may suspend or terminate its operations without prior authorization from the Superintendence.

CNBCR-11/2024 NRP-84 TECHNICAL STANDARDS ON OPENING, OPERATION, AND CLOSURE OF BRANCHES OF FINANCIAL ENTITIES Approval: 12/19/2024 Effective Date: 01/03/2025 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 2 of 14

X. That Article 156 of the Law on Cooperative Banks and Savings and Credit Societies establishes that the fundamental provisions contained in Book One of said Law shall apply to savings and credit societies. XI. That Article 157 of the Law on Cooperative Banks and Savings and Credit Societies establishes that the provisions of the Banks Law contained in Title Two, relating to organization, administration, and operation, shall apply to savings and credit societies, with the modifications detailed in the aforementioned article. XII. That Article 1 of the Law on the Development Bank of the Republic of El Salvador establishes that the Development Bank of the Republic of El Salvador, which may be abbreviated as "BANDESAL," is created as a public credit institution, autonomous, of indefinite duration, with legal personality and its own assets. It shall have its domicile in the city of San Salvador and may establish and maintain branches, agencies, or dependencies anywhere in the Republic and even maintain correspondent offices outside it. XIII. That Article 92 of the Law on the Development Bank of the Republic of El Salvador establishes that, regarding the banking, stock market, and commercial operations carried out by the bank, in all matters not provided for in this law, the provisions contained in banking, stock market, financial, commercial legislation, and, in default thereof, the norms of common law, shall be applicable. XIV. That Article 14, first paragraph, of the Law on Investment Banks establishes that investment banks must inform the Superintendent about each project for opening branches in the country that they decide to undertake. (1) XV. That Article 14, fourth paragraph, of the Law on Investment Banks establishes that, in the case of branch closures, investment banks must notify the Superintendence and the public, at least sixty business days in advance. (1) XVI. That Article 15, first paragraph, of the Law on Investment Banks establishes that investment banks are institutions of mandatory operation, so once their operation is authorized, they may not suspend or terminate their operations without prior authorization from the Superintendence. (1) XVII. That Article 4, letter p), of the Law on Supervision and Regulation of the Financial System establishes that it is the faculty of the Superintendence to exercise all other supervision activities and other faculties corresponding to the Superintendence, in accordance with the specific laws applicable to the supervised entities, insofar as they do not contradict this Law. (1)

CNBCR-11/2024 NRP-84 TECHNICAL STANDARDS ON OPENING, OPERATION, AND CLOSURE OF BRANCHES OF FINANCIAL ENTITIES Approval: 12/19/2024 Effective Date: 01/03/2025 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 3 of 14

XVIII. That Article 99, third paragraph, letter a), of the Law on Supervision and Regulation of the Financial System establishes that it is the responsibility of the Norms Committee of the Central Reserve Bank of El Salvador to approve technical standards on any other aspect inherent to risk management by the supervised entities. (1) XIX. That Article 101, fourth paragraph, of the Law on Supervision and Regulation of the Financial System establishes that the faculties to approve, modify, and repeal technical standards that must be complied with by the members of the financial system and other supervised entities are transferred to the Central Reserve Bank of El Salvador. (1)

THEREFORE, by virtue of the regulatory faculties conferred by Article 99 of the Law on Supervision and Regulation of the Financial System,

AGREES to issue the following:

TECHNICAL STANDARDS ON OPENING, OPERATION, AND CLOSURE OF BRANCHES OF FINANCIAL ENTITIES

CHAPTER I OBJECTIVE, SUBJECTS, AND TERMS

Objective Art. 1.- These Standards aim to establish the procedure that subjects must comply with for the opening, operation, and closure of branches in the country.

Subjects Art. 2.- The subjects obligated to comply with the provisions established in these Standards are: a) Banks constituted in the country; b) Branches of foreign banks established in the country, where pertinent; c) Cooperative banks; d) Savings and credit societies; e) The Mortgage Bank of El Salvador, S.A.; f) The Agricultural Development Bank, insofar as it does not contradict its creation law; (1) g) The Development Bank of the Republic of El Salvador, insofar as it does not contradict its creation law; and (1) h) Investment Banks. (1)

Terms Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning: a) Branch: The office physically separate from the head office or central office, which is an integral part of the same legal entity, which can carry out the same operations as the head office, which has no assigned capital, and whose accounting is not separate from the head office or central office; b) Central Bank: Central Reserve Bank of El Salvador; c) Entity: Subjects obligated to comply with these Standards; d) Establishment: Premises physically separate from a branch that form part of it and can carry out the same operations as the branch, in a limited manner regarding amounts and services; e) Commercial Establishment: The physical space where financial entities provide their financial services to the public. Such establishments are offered by legally established commercial companies that sign a contract with the financial entities for the latter to provide services within their facilities; f) Board of Directors: A collegiate body or equivalent body in charge of the administration of the entity, with functions of supervision, direction, and control; in the case of Cooperative Associations, it shall be the Board of Administration or as defined in its Creation Law; and g) Superintendence: Superintendence of the Financial System.

CHAPTER II PROCEDURE FOR OPENING AND CLOSURE OF BRANCHES

Opening of Branches Art. 4.- The entity interested in opening a branch must inform the Superintendence through the means made available by it, which may be electronic, attaching the following documentation: a) Certification of the agreement of the Board of Directors of the requesting entity stating that the opening of the branch was agreed upon; b) Exact address and location of the place where the branch will be installed, accompanied by the location sketch and the corresponding architectural plan; c) Sworn declaration signed by the Legal Representative or General Attorney of the requesting entity, which must incorporate the following elements: i. The security measures that will be adopted and implemented before starting operations; and ii. Confirmation of having reviewed the content of the lease contract for the corresponding property, if applicable, as well as of not having found significant legal risks affecting the entity's assets, including those that might arise if the lessors are related persons to the entity; it must be verified that the clauses comply with applicable legal provisions and, fundamentally, with aspects relating to: the generalities of the contracting parties; the ownership and characteristics of the property subject to lease and its use; term and lease payment; obligations of both the lessor and the lessee, expressly incorporating the commitment of the contracting parties not to promote practices that could lead to the violation of the figure of banking secrecy and information subject to confidentiality; the mechanisms for dispute resolution, among others; d) Amount of the investment to be made and calculation of the effect it will have on the equity requirement and the limit of investment in fixed assets; e) Contingency and business continuity plans, which allow the subjects obligated by these Standards to preserve their capacity to operate constantly and minimize losses in cases of contingent or fortuitous events when these oblige them to temporarily interrupt their activities; f) Market study including an analysis of expected demand; g) Feasibility study in PDF format signed by the person responsible for or in charge of the area that prepared it, and in editable format with its respective formulas, accompanied by the justification of assumptions adopted for its preparation; and h) Copy of the Lease Contract and/or Agreement, when applicable. When the entity decides to relocate a branch to a different premises or decides to open an establishment, the same process for opening shall be followed by presenting all the documentation established in the first paragraph of this article, except regarding letters d), f), and g). In the case of the opening of an establishment, they must detail the operations and services they will carry out in said establishment, indicating the limits of operations and services they will provide, as well as the human and operational resources they will have to carry them out.

Procedure for the Opening of a Branch Art. 5.- Upon receipt of the documentation in accordance with what is established in Article 4 of these Standards, the Superintendence will proceed to verify compliance with the requirements defined therein, having a maximum period of thirty days counted from the next business day after the documentation was presented to object to the project if it considers that it would have a negative impact on the financial and administrative capacity of the entity. If the information is not received complete and in due form, as detailed in Article 4 of these Standards, the Superintendence, due to the lack of necessary requirements, may require the entity to present the missing documents within a period of ten business days counted from the day following the notification, a period that may be extended at the request of the entity, when there are reasons justifying it. The Superintendence in the same notice will indicate to the entity that if it does not complete the information within the aforementioned period, it will proceed without further procedure to archive the documentation, leaving its right to present it again intact. If after analyzing the documentation presented, according to what is established in Article 4 of these Standards, the Superintendence has observations or when the documentation or information presented is not sufficient to establish the facts or information intended to be proven, the Superintendence may notify the entity to remedy the deficiencies communicated to it or present additional documentation or information requested. The entity will have a maximum period of ten business days counted from the day following the notification, to resolve the observations or present the information required by the Superintendence. The Superintendence may, through a reasoned resolution, extend by up to another ten business days the period indicated in the previous paragraph, when the nature of the observations or deficiencies notified so requires.

Extension Period for the Opening of a Branch Art. 6.- The entity may present to the Superintendence a request for extension of the period indicated in the fifth paragraph of Article 5 of these Standards, before the expiration of said period, expressing the grounds on which it is based and proposing, if applicable, the relevant proof. The extension period may not exceed ten business days and will start from the next business day after the expiration date of the original period.

Suspension of the Period for the Opening of a Branch Art. 7.- The thirty-day period indicated in the first paragraph of Article 5 of these Standards will be suspended for the days that elapse between the notification of the request for information or documentation referred to in the second and fifth paragraphs of said article, until the observations required by the Superintendence are remedied.

Communication of the Non-Objection Resolution Art. 8.- The Superintendence will proceed to object or not to such request, and must notify the corresponding resolution regarding the branch opening project within a maximum period of three business days from the date the resolution is issued. Once the non-objection resolution is communicated, the entity will have a period of one hundred eighty business days from the day following the notification to open the branch; this period may be extended by thirty more days, at the request of the interested entity. Entities interested in the opening of a branch, once informed to the Superintendence in accordance with what is established in Article 4 of these Standards, and once the non-objection resolution is obtained from it, must communicate to their clients through the means and/or channels defined by it, the opening date of the same, which will be within the periods established in the second paragraph of this article.

Branch Closure Art. 9.- For the closure of a branch, the interested entity must inform the Superintendence through the means made available by it, which may be electronic, of the following: a) Date when public service will cease; b) Justification duly documented regarding the decision to close that is intended to be made; and c) Copy of the measures adopted to inform users about the termination of the branch's services and about service options at other branches. Banks, Savings and Credit Societies, branches of foreign banks, as well as the Agricultural Development Bank, the Mortgage Bank of El Salvador, and the Development Bank of the Republic of El Salvador, must present to the Superintendence the documents through the means made available by it, which may be electronic. Likewise, they must inform their clients, users, and the general public, at least sixty days in advance, of the closure of their branches and publish it in a printed medium of national circulation or another digital publication platform with greater or equal coverage or on their website, in accordance with what is established in the current legal framework. The aforementioned entities must indicate in the publications, alternatives for serving their clients at other branches or offices. Investment Banks must present to the Superintendence the documents through the means made available by it, which may be electronic. Likewise, they must inform their clients, users, and the general public, at least sixty business days in advance, of the closure of their branches and publish it in a printed medium of national circulation or another digital publication platform with greater or equal coverage or on their website, in accordance with what is established in the current legal framework. The aforementioned entities must indicate in the publications, alternatives for serving their clients at other branches or offices. (1) Cooperative Banks must present to the Superintendence the documents in writing or through the means made available by it, which may be electronic, as well as inform their clients, users, and the general public, at least thirty days in advance, of the closure of their branches and carry out the publications in a printed medium of national circulation or another digital publication platform with greater or equal coverage or on their website, in accordance with what is established in the current legal framework. The aforementioned entities must indicate in the publications, alternatives for serving their clients at other branches or offices. Upon receipt of the documentation in accordance with the aforementioned letters, the Superintendence will proceed to verify compliance with the requirements defined therein, having a maximum period of thirty days from the next business day after the documentation for the branch closure was presented. If the information is not received complete and in due form, as detailed in this article, the Superintendence, due to the lack of necessary requirements, may require the entity to present the missing documents within a period of ten business days counted from the day following the notification, a period that may be extended at the request of the entity, when there are reasons justifying it. The Superintendence in the same notice will indicate to the entity that if it does not complete the information within the aforementioned period, it will proceed without further procedure to archive the documentation, leaving their right to present it again intact. If after analyzing the documentation presented, according to what is established in this article, the Superintendence has observations or when the documentation or information presented is not sufficient to establish the facts or information intended to be proven, the Superintendence may notify the entity to remedy the deficiencies communicated to it or present additional documentation or information requested. The entity will have a maximum period of ten business days counted from the day following the notification, to resolve the observations or present the information required by the Superintendence. The Superintendence may, through a reasoned resolution, extend by up to another ten business days the period indicated in the previous paragraph, when the nature of the observations or deficiencies notified so requires. In the event that the closure of a branch is prolonged beyond the date projected by the entity and duly valued by the Superintendence, the closure may be carried out after the previously established date. In situations of force majeure or fortuitous event in accordance with what is established in Article 17 of these Standards or other exceptional circumstances duly analyzed by the Superintendence, the closure of branches of the entities may be carried out before the previously defined closure date in accordance with the periods indicated in the first paragraph of this article. Art. 10.- Branch openings or closures that are delayed or anticipated due to force majeure or fortuitous event, for a