Banking Board of Ecuador

RESOLUTION No. JB-2015-3325

BANKING BOARD

CONSIDERING:

THAT this appeal is resolved in accordance with the First Transitional Provision of the Organic Monetary and Financial Code, published in the Official Register Second Supplement No. 332, of September 12, 2014, whose text states that resolutions contained in the Compilation of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, and the norms issued by the control bodies, will remain in effect in all that does not oppose what is established in the Organic Monetary and Financial Code, until the Monetary and Financial Policy and Regulation Board resolves what corresponds, according to the case; and, with the second paragraph of the Third Transitional Provision, which states that the Banking Board will continue to act until it resolves all claims, appeals, and other administrative procedures that it was hearing on the date of its entry into force, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT by letter No. CSO-CANJE-CAMDEF-2013-103, of December 10, 2013, Mr. Diego Andrade Carrera, Authorized Signatory of Banco Pichincha C.A., requested authorization from the Superintendence to process structure T37 "Modification of recovery records and protested checks" in order to eliminate protested checks Nos. 2821 and 2833 drawn against checking account No. 3101507104 of Mr. Figueroa Palacios Andrés Xavier, "whose root was an operational error when executing the payment of check 2848, causing an incorrect debit to the client's account (...)" and attached supporting documentation;

THAT by letter No. DNEI-SES-2014-0067, of February 4, 2014, the National Directorate of Studies and Information requested the bank to send supporting documentation within five (5) days, such as photocopies of the protested checks showing the cash register stamp, date and time of protest, the checking account statement showing the number of each check, the available balance and the accounting balance, credit notes if any, and documents that the bank deems convenient for the approval of the aforementioned structure;

THAT through letter No. CSO-CANJE-CAMDEF-2014-115, of February 11, 2014, the bank attended the request of this control body; it was determined by the National Directorate of Studies and Information through letter No. DNEI-SES-2014-0124, of February 17, 2014, that the aforementioned letter did not include the "Special Structures Form for Checking Accounts and Protests Checks", and that supporting documents were only partially attached, preventing a technical analysis, with the objective of making the requested requirement viable or not, and the bank was requested to send to the National Directorate of Studies and Information within 24 hours the photocopies of the checking account statement showing the number of

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each of the protested checks, the available balance and the accounting balance; mainly the reasons that motivated the protests, for this reason the bank's request could not be favorably attended;

THAT by letter No. DNEI-SES-2014-0163, of February 27, 2014, after reviewing the information reception records, the National Directorate of Studies and Information observed that Banco Pichincha C.A. did not comply with the instruction issued through letter No. DNEI-SES-2014-0124, so a fine of US$ 1,000.00 was imposed on Mr. Simón Andrés Acosta Espinosa, in his capacity as Legal Representative of Banco Pichincha C.A.;

THAT with a document entered into this control body on March 10, 2014, Banco Pichincha C.A. filed an administrative review appeal against the administrative act contained in letter No. DNEI-SES-2014-0163, of February 27, 2014, in order to have the fine of US$ 1,000.00 (one thousand United States dollars) imposed on Mr. Simón Andrés Acosta Espinosa, Legal Representative of Banco Pichincha C.A., annulled;

THAT through letter No. DNEI-SES-2014-391, of May 30, 2014, the sanction imposed contained in letter No. DNEI-SES-2014-0163, of February 27, 2014, was ratified;

THAT by document entered into the Superintendence on June 11, 2014, Mr. Antonio Acosta Espinosa, Deputy President of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo, filed before the Banking Board an appeal for review against the administrative act contained in letter No. DNEI-SES-2014-391, of May 30, 2014; which was accepted for processing by Lic. Pablo Cobo Luna, Secretary of the Banking Board, through letter No. JB-2014-1530, of June 16, 2014, and in which it is argued:

• That the lack of motivation contradicts what is expressly provided in numeral 23 of article 66 of the Constitution of the Republic, in addition to the fact that the lack of motivation in a resolution of the public authority leads to its nullity.

"... since the required defenses were provided with which the control body would attend to the case in question, no type of sanction can be imposed."

"... reference is made to the non-observance of articles 77 and 80 of the Organic Law of Institutions of the Financial System, regarding the facilities that must be given to the Superintendence; however, Banco Pichincha C.A. has not failed to observe the aforementioned articles by sending the information requested by the Superintendence of Banks and Insurance, which shows our collaboration in the case in question, it being important to highlight our usual attention to each of the requests of the control entity."

THAT through letter No. DNEI-SES-2014-391, of May 30, 2014, the administrative review appeal filed by Mr. Antonio Acosta Espinosa,

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Deputy President of Banco Pichincha C.A., against letter No. DNEI-SES-2014-0163 of February 27, 2014 was denied; and, after reviewing the information reception records of the National Directorate of Studies and Information, it was established that Banco Pichincha C.A. until February 27, 2014, that is, ten days after the date of the request letter, did not comply with the instruction of the National Directorate mentioned, so non-compliance with the instruction issued by this control body was established, according to article 2, chapter I, title XVI, book I of the Compilation of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, which states:

"ARTICLE 2.- INSTRUCTIONS OF THE SUPERINTENDENCE OF BANKS AND INSURANCE.- They are the set of mandates, provisions, rules and guidelines that are generated in the course of the supervision activity, which the Superintendence of Banks and Insurance transfers to the financial system and that are related to the current regulations, control and surveillance, as well as with the activities and practices of the controlled institutions.

These instructions may be contained in resolutions, letters and circulars and be general, that is, for the entire financial system; or, specific, that is, directed to a specific entity."

THAT in virtue of this, letter No. DNEI-SES-2014-0163 of February 27, 2014 was issued, through which the fine of USD 1000.00 was imposed on Mr. Simón Andrés Acosta Espinosa, in his capacity as Legal Representative of Banco Pichincha C.A.;

THAT as noted in letter No. DNEI-SES-2014-0391 of May 30, 2014, Banco Pichincha C.A. should have gathered in advance to the disposition on the reverse of the check, all the documents and background that supported the request, so the 24-hour period granted by this control body for the delivery of additional documents was sufficient to transfer this information to the Superintendence; however, it should be noted that the National Directorate of Studies and Information applied the sanction eight days after the deadline had expired, and the bank sent this documentation fifteen days after the date of the original request, that is, on March 5, 2014 with letter No. CSO-CANJE-CAMDEF-2014-121, from which it is inferred that Banco Pichincha C.A., in the present case, did not observe what is established in articles 77 and 80, first paragraph, of the General Law of Institutions of the Financial System, which state:

"ARTICLE 77.- Financial system institutions will be obliged to provide all facilities so that the Superintendence fulfills its functions and must give access to their accounting, books, correspondence, files or documents justifying their operations to the Superintendent or his delegates."

"ARTICLE 80.- The information that financial institutions send to the Superintendence must be supplied in accordance with the instructions that it issues;"

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THAT it is important to cite article 134 of the Compilation of the General Law of Institutions of the Financial System, in force at the date of the commission of the infraction, based on which the sanction was imposed, which states:

"Art. 134.- When in a financial system institution its directors, administrators, officials or employees infringe laws or regulations that govern their operation and said laws or regulations do not establish a special sanction, or in cases where they contravene instructions issued by the Superintendence, it will impose the sanction according to the gravity of the infraction, which will not be less than 50 UVCs and will not exceed 3,000 UVCs.

Recidivism of the infraction, of contravening instructions issued by the Superintendence, will be the responsibility of the entity.

The same sanction will be imposed on any person or institution that without having the qualities indicated in the preceding paragraph, commits infractions to this Law, its regulations or instructions issued by the Superintendence, when such infractions do not have a specific sanction.";

THAT through the details exposed, the regulatory framework that fundamentally supported the content of the resolution subject of this review appeal is detailed, qualifying as unfounded the argument that alleges lack of motivation of the act that Banco Pichincha C.A. attempts to revoke, so consequently the imposition of the fine for the amount of US$ 1,000.00 (ONE THOUSAND UNITED STATES DOLLARS), imposed on Mr. Simón Andrés Acosta Espinosa, in his capacity as Legal Representative of Banco Pichincha C.A., is duly founded;

THAT finally it is necessary to point out that additionally in the present case, the National Directorate of Studies and Information through letter No. DNEI-SES-2014-0182, of March 6, 2014, upon verifying that an operational error had been committed by the bank in paying check No. 2848 for the value of US$5,715.30 whose debit caused the protests of checks Nos. 2821 and 2833, considering that if said value had not been effected, the checking account would have had the necessary funds to pay the protested checks on the date of their presentation; in accordance with article 134 of the General Law of Institutions of the Financial System, imposed a fine of US$ 131.44 on the Legal Representative of Banco Pichincha C.A. and authorized the elimination of checks No. 2821 and 2833 drawn against checking account No. 3101507104 belonging to Mr. Figueroa Palacios Andrés Xavier;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2014-1041 of December 19, 2014, recommended to the Banking Board to reject the claim contained in the review appeal filed; and,

IN exercise of its legal attributes,

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RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the review appeal filed by Mr. Antonio Acosta Espinosa, Deputy President of Banco Pichincha C.A.; and, consequently, CONFIRM letter No. DNEI-SES-2014-391, of May 30, 2014, through which the National Directorate of Studies and Information denied the administrative review appeal and ratified the administrative act contained in letter No. DNEI-SES-2014-0163, of February 27, 2014, in which a fine of US$ 1,000.00 dollars was imposed on Mr. Simón Andrés Acosta Espinosa, in his capacity as Legal Representative of Banco Pichincha C.A., in accordance with what is established in article 134 of the Compilation of the General Law of Institutions of the Financial System.

NOTIFY.- Given at the Superintendence of Banks, in Quito, Metropolitan District, on April 1, 2015.

Econ. Rodrigo Landeta Parra
GENERAL INTENDANT, S
PRESIDENT OF THE BANKING BOARD, E

I CERTIFY.- Quito, Metropolitan District, on April 1, 2015.

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD