Region

Jurisdiction

Regulator

2024-09-23 | NRP-81

Technical Standards for the Authorization of the Establishment of Information Offices of Foreign Banks

The Central Reserve Bank of El Salvador issued Technical Standards NRP-81 to regulate the authorization process for foreign banks establishing information offices in the country. The regulations mandate specific documentation, legal representation, and financial reporting requirements, subjecting applicants to a 90-day review period for initial establishment and a 60-day period for renewals. Compliance is strictly enforced by the Superintendence of the Financial System, which holds the authority to deny applications, suspend authorizations, and impose sanctions for non-compliance.

El Salvador

Superintendencia del Sistema Financiero

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

CONSIDERING: I. That Article 26, second paragraph, of the Banking Law establishes that authorization will be required, even in the case of foreign banks that propose to open offices, to serve as information centers for their clients or to place funds in the country in credits or investments, without carrying out passive operations within the national territory. The authorization will be for a period of up to two years and may be extended by the Superintendence of the Financial System for equal periods, provided that the bank meets the legal requirements. II. That Article 27 of the Banking Law establishes the requirements that foreign banks must meet when they propose to request from the Superintendence of the Financial System the authorization referred to in Article 26, second paragraph, of the same Law. III. That Article 28 of the Banking Law outlines the procedure to obtain authorization so that a foreign bank can establish an office in the country. IV. That Article 29 of the Banking Law establishes that foreign banks authorized to operate in the country will be subject to inspection and supervision by the Superintendence of the Financial System under the same terms as Salvadoran banks. V. That Article 4, letter e), of the Law on Supervision and Regulation of the Financial System establishes that the Superintendence of the Financial System will have the power to authorize institutions or entities constituted under foreign laws that propose to operate as offices to serve as information centers for their clients in the country, place funds in the country in credits or investments, as well as to authorize the closure of the same. VI. That Article 7, letter b), of the Law on Supervision and Regulation of the Financial System establishes that the supervision of offices of foreign banks established in the country corresponds to the Superintendence of the Financial System.

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

AGREES to issue the following:

TECHNICAL STANDARDS FOR THE AUTHORIZATION OF THE ESTABLISHMENT OF INFORMATION OFFICES OF FOREIGN BANKS

CHAPTER I OBJECT, SUBJECTS, AND TERMS

Object Art. 1.- These Standards aim to establish the procedures and information requirements that foreign banks must fulfill so that the Superintendence of the Financial System authorizes the opening of establishments known as offices.

Subjects Art. 2.- The subjects obliged to comply with the provisions established in these Standards are banks constituted under foreign laws, when they propose to open offices in El Salvador, to serve as information centers for their clients or to place funds in the country in credits or investments.

Terms Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning: a) Central Bank: Central Reserve Bank of El Salvador; b) Foreign Bank: Institutions or entities constituted under foreign laws authorized to operate as banks in their country of origin; c) Law: Banking Law; d) Office: Information centers to place funds in the country in credits or investments, without carrying out passive operations within the national territory; e) Superintendence: Superintendence of the Financial System.

CHAPTER II INFORMATION REQUIREMENTS

Art. 4.- Any foreign bank that proposes to establish an office to carry out the activities related in Article 2 of these Standards must submit an application through the means established by the Superintendence, signed by the legal representative or attorney-in-fact, which must be accompanied by the following information: a) Deed of incorporation, bylaws, and any other document that proves the legal existence of the head office and the authority to establish information offices abroad; b) Certificate issued by the supervisory body or the organism responsible for the audit of the head office, stating that the applicant entity is authorized to operate as a bank in its country of origin;

CNBCR-09/2024 NRP-81 TECHNICAL STANDARDS FOR THE AUTHORIZATION OF THE ESTABLISHMENT OF INFORMATION OFFICES OF FOREIGN BANKS Approval: 09/23/2024 Validity: 10/09/2024 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 8 c) Resolution of the head office, authorizing the establishment of the office; d) Authorization issued by the organism responsible for the audit of the head office, for the establishment of the office in El Salvador, when applicable; e) Report from the supervisory body of the head office, containing a description of the prudential norms to which it is subject; f) Certification of the agreement of the corresponding body of the applicant institution, in which an express declaration is made that it commits to: i. Maintain permanently in El Salvador, at least one representative with broad and sufficient powers to carry out all acts and contracts that must be executed and have effect within the national territory; and ii. Expressly submit to the laws, courts, and authorities of El Salvador, regarding the acts and contracts that it executes within Salvadoran territory and that are to have effect therein. The power of attorney issued in compliance with the preceding letter i) must be granted clearly and precisely to bind the represented institution to respond unlimitedly inside and outside the country for the acts and contracts executed in El Salvador; for which purpose, the formalities required by Salvadoran law and those of the country of origin of the head office must be complied with. g) Basic financial statements of the last five years, with the corresponding external auditor's report; h) Report from the supervisory entity of the head office, regarding its financial situation for the last five years; i) Ratings for the last five years, issued by internationally recognized risk rating agencies; and j) Structure of the conglomerate or financial group, including the countries in which said group has a presence and the percentage of share ownership it holds in each of the member companies.

Art. 5.- The documents mentioned in the previous article, except those contained in letters c), f), g), and i), must undergo the apostille procedure, in the case of countries party to the 1961 Hague Convention; otherwise, they must be legalized by the Head of the Diplomatic Mission, Consul, Vice-Consul, or Head of Consular Affairs of El Salvador, or failing that, by officials of the Ministry of Foreign Relations from where such documents originate, and the signature legalizing it must be authenticated by the Minister or Vice-Minister of Foreign Relations of El Salvador, or by the official who has been generally authorized for this purpose. They will also serve as evidence if they are extended by means of photocopies, provided that, by a note placed on the reverse of the same, the fidelity of such photocopies is recorded and that the formalities required by the law of the country of the head office have been fulfilled. This note

Art. 6.- Documents emanating from a foreign country, written in a language other than Spanish, to serve as evidence in El Salvador, must be translated into this language by an interpreter appointed by a competent judge or before a notary public of El Salvador, in accordance with the Law on the Practice of Notarial Services of Voluntary Jurisdiction and Other Proceedings. The application and documentation may be submitted through the means made available by the Superintendence, which may be electronic. In any case, the period referred to in the first paragraph of Article 7 of these Standards will begin to run from the next business day after the application has been submitted.

CHAPTER III PROCEDURE FOR THE APPLICATION

Application for authorization to establish information offices of foreign banks

Art. 7.- Upon receipt of the application for authorization to establish information offices of foreign banks in accordance with what is established in Articles 4, 5, and 6 of these Standards, the Superintendence will proceed to verify compliance with the requirements defined in the Law and in these Standards, having ninety days following to authorize or deny the application for authorization to establish information offices of foreign banks. If the application is not accompanied by complete and properly formatted information, as detailed in Articles 4, 5, and 6 of these Standards, the Superintendence, due to the lack of necessary requirements, may require the applicant 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 interested party when there are reasons justifying it. The Superintendence in the same notice will indicate to the applicant that if they do not complete the information within the aforementioned period, it will proceed without further procedure to archive the application, reserving their right to submit a new application. If after the analysis of the documentation presented in accordance with Articles 4, 5, and 6 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 accredited; the Superintendence will notify the respective applicant to remedy the deficiencies communicated to them or present additional documentation or information requested.

Extension Period Art. 8.- The applicant may submit to the Superintendence an application for extension of the period indicated in the fifth paragraph of Article 7 of these Standards, before the expiration of said period, must express the grounds on which it is based and propose, if applicable, the relevant proof. The extension period cannot exceed ten business days and will start from the next business day after the expiration date of the original period.

Suspension of the Period Art. 9.- The ninety-day period indicated in the first paragraph of Article 7 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. In addition to the information required from foreign banks, the Superintendence must have a report from the Central Bank.

Resolution Art. 10.- Upon receipt of the report from the Central Bank, the Superintendence will approve or deny the application for authorization to establish information offices of foreign banks. In the event that this resolution is favorable, the inscription in the Commercial Registry of the constitutive instruments of the institution in question or a certification of the same will be authorized in the same. The authorization will be for a period of up to two years and may be extended for equal periods prior to authorization by the Superintendence. The Superintendence will proceed to notify the applicant of the corresponding resolution within a maximum period of three business days, from the date of its issuance.

Authorization of extension of information offices of foreign banks Art. 11.- The foreign bank with an authorized office must submit to the Superintendence the application for extension of the authorization within the sixty days prior to its expiration, must comply for such purposes with the following requirements: a) Application signed by the legal representative through the means established by the Superintendence; b) Resolution of the head office to extend the establishment of the accredited information office in the country; c) Updated rating of the head office, issued by an internationally recognized risk rating agency; d) Certification or certificate from the supervisory body of the head office, to extend the operations of the office in El Salvador for two years; e) Renewal of the declaration of the head office in the terms expressed in letter f) of Article 4 of these Standards and the corresponding power of attorney; and f) Inventory of the credit portfolio placed in El Salvador at the close of the month prior to the date the application is submitted in Excel format and that at least contains the following fields: tax identification number, name of the debtor, amount placed in United States dollars, interest rate, balance of principal and interest, date of granting, maturity date, destination of funds, and category of the debtor, when applicable. The documents mentioned above, except those contained in letters b) and f), must undergo the apostille or legalization procedure as applicable, in the same manner as mentioned for the establishment of information offices, in Article 5 of these Standards. The application and documentation may be submitted through the means made available by the Superintendence, which may be electronic. In any case, the period referred to in the first paragraph of Article 12 of these Standards will begin to run from the next business day after the application has been submitted.

Procedure for authorization of extension of information offices of foreign banks Art. 12.- Upon receipt of the application for authorization of extension of information offices of foreign banks in accordance with what is established in Article 11 of these Standards, the Superintendence will proceed to verify compliance with the requirements defined in the Law and in these Standards, having sixty days following to authorize or deny the application. If the application is not accompanied by complete and properly formatted information, as detailed in Article 11 of these Standards, the Superintendence, due to the lack of necessary requirements, may require the applicant 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 interested party when there are reasons justifying it.

The Superintendence in the same notice will indicate to the applicant that if they do not complete the information within the aforementioned period, it will proceed without further procedure to archive the application, reserving their right to submit a new application. If after the analysis of the documentation presented in accordance with Article 11 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 accredited; the Superintendence will notify the respective applicant to remedy the deficiencies communicated to them or present additional documentation or information requested. The applicant will have a maximum period of ten business days counted from the day following the notification, to resolve the observations or present the additional 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 preceding paragraph, when the nature of the observations or deficiencies notified so requires.

Extension Period Art. 13.- The applicant may submit to the Superintendence an application for extension of the period indicated in the fifth paragraph of Article 12 of these Standards, before the expiration of said period, must express the grounds on which it is based and propose, if applicable, the relevant proof. The extension period cannot exceed ten business days and will start from the next business day after the expiration date of the original period.

Suspension of the Period Art. 14.- The sixty-day period indicated in the first paragraph of Article 12 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.

Resolution Art. 15.- Once the complete and properly formatted documents are presented, the Superintendence will issue the resolution in which it authorizes or denies the application for authorization of extension of the establishment of information offices of foreign banks, and will proceed to notify the applicant within a maximum period of three business days from the day the resolution is issued.

Art. 16.- Upon compliance with the requirements for the establishment or extension of the information office, the Superintendence will publish the corresponding resolution at the expense of the Branch, in the Official Diary and in two printed media of national circulation or another digital publication platform with greater or equal coverage, or on its website, in accordance with what is established in the current legal framework.

Art. 17.- The resolution issued by the Superintendence for the office to start its operations will be for a maximum period of six months, after which it will become void.

CHAPTER IV OTHER PROVISIONS AND VALIDITY

Art. 18.- The Superintendence may suspend the authorization to operate of the offices of foreign banks, when these carry out passive operations or fail to comply with any of the provisions or requirements established in these Standards or in the Law, without prejudice to the criminal liabilities that may arise.

Sanctions Art. 19.- Non-compliance with the provisions contained in these Standards will be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System.

Repeal Art. 20.- These Standards repeal -12), approved by the Board of Directors of the Superintendence of the Financial System in Session No. CD-38/2001 of August 1, 2001, whose Organic Law was repealed in accordance with Legislative Decree No. 592 which contains the Law on Supervision and Regulation of the Financial System, published in the Official Diary No. 23, Volume No. 390, dated February 2, 2011.

Transitory Art. 21.- Standards for Authorizing the Establishment of Information Offices of Foreign Banks NPB1-12) and which were in process at the time these Standards entered into force, will continue and be concluded in accordance with the regulations under which they began.

Unforeseen Aspects Art. 22.- The aspects not provided for in regulatory matters in these Standards will be resolved by the Central Bank, through its Norms Committee.

Validity Art. 23.- These Standards will enter into force on October 9, two thousand twenty-four.