Agreement No. 003-2021 Adding Article 7-A to Agreement No. 2-2021 Regarding Modified Credits

Republic of Panama Superintendence of Banks AGREEMENT No. 003-2021 (August 10, 2021) "Adding Article 7-A to Agreement No. 2-2021, which establishes the parameters and guidelines applicable to modified credits"

THE BOARD OF DIRECTORS

In exercise of its legal powers, and

CONSIDERING:

That as a result of the issuance of Decree-Law No. 2 of February 22, 2008, the Executive Branch prepared a systematic ordering in the form of a single text of Decree-Law No. 9 of February 26, 1998, and all its modifications, which was approved through Executive Decree No. 52 of April 30, 2008, hereinafter the Banking Law;

That in accordance with paragraphs 1 and 3 of Article 5 of the Banking Law, it is the objective of the Superintendence of Banks to ensure the solidity and efficiency of the banking system; as well as to promote public confidence in the banking system;

That paragraph 5 of Article 11 of the Banking Law provides, within the technical attributions of the Board of Directors, the power to fix, in the administrative sphere, the interpretation and scope of legal or regulatory provisions in banking matters;

That through Agreement No. 4-2013 of May 28, 2013, provisions were established regarding the management and administration of credit risk inherent to the credit portfolio and off-balance sheet operations;

That the Superintendence of Banks issued Agreement No. 2-2020 of March 16, 2020, which establishes additional, exceptional, and temporary measures for compliance with the provisions contained in Agreement No. 4-2013 on credit risk;

That through Agreement No. 2-2021 of June 11, 2021, this Superintendence establishes the parameters and guidelines that will be applicable to modified credits, and substitutes Agreement No. 2-2020 of March 16, 2020, and all its modifications;

That in accordance with Articles 6 and 7 of Agreement No. 2-2021, banking entities will have until September 30, 2021, to carry out the restructuring of modified credits that are classified in the "special mention modified" category and that as of June 30, 2021, had not managed to agree on new terms and conditions, provided they meet the characteristics for their restructuring;

That in working sessions of this Board of Directors, the need and convenience of modifying Agreement No. 2-2021 has been highlighted, in order to add an article that establishes the delinquency counter for modified credits that are subject to restructuring.

AGREES:

ARTICLE 1. Article 7-A is added to Agreement No. 2-2021, as follows:

Agreement No. 003-2021 Page 2 of 2

ARTICLE 7-A. DELINQUENCY COUNTER FOR RESTRUCTURED MODIFIED CREDITS. For the purposes of calculating the delinquency of modified credits that are subject to restructuring in accordance with the guidelines established in Articles 6 and 7 of this Agreement, the delinquency days of these restructured credits will begin to be counted from the payment default on the date established in the restructuring, in accordance with the payment plan agreed upon with the client.

In the event that the client fails to make the payment on the date established in their new terms and conditions of restructuring, banking entities must reclassify said credit in accordance with Agreement No. 4-2013, after a period of ninety-one (91) days has elapsed from the default. In these cases, said credits must be classified in the subnormal category as a restructured credit and, consequently, cease to be considered modified credits as provided in the General Resolution of the Board of Directors SBP-GJD-0003-2021 of June 11, 2021.

After the aforementioned period has elapsed, the credit must be excluded from the modified credit category, and any changes to the terms and conditions will be governed in accordance with Agreement No. 4-2013.

ARTICLE 2. VALIDITY. This Agreement will come into effect from its promulgation.

Given in the city of Panama, on the tenth (10) day of the month of August of two thousand twenty-one (2021).

NOTIFY, PUBLISH, AND COMPLY.

THE PRESIDENT, THE SECRETARY, Luis Alberto La Rocca Rafael Guardia Pérez