Agreement No. 005-2012 Regarding Interbank Deposits and Activities of International License Banks

Republic of Panama
Banking Superintendence
AGREEMENT No. 005-2012
(September 25, 2012)
"By means of which the regulations regarding interbank deposits are compiled and updated, and those other activities that international license banks may carry out are regulated."

THE BOARD OF DIRECTORS in the exercise of its legal powers, and CONSIDERING:

That as a result of the issuance of Decree-Law 2 of February 22, 2008, the Executive Branch prepared a systematic ordering in the form of a single text of Decree-Law 9 of February 26, 1998, and all its modifications, which was approved through Executive Decree 52 of April 30, 2008, hereinafter the Banking Law;

That in accordance with numeral 1 of article 5 of the Banking Law, it is the objective of the Banking Superintendence to ensure the solidity and efficiency of the banking system;

That in accordance with numeral 5 of article 11 of the Banking Law, it corresponds to the Board of Directors to establish, within the administrative scope, the interpretation and scope of legal or regulatory provisions in banking matters;

That through Agreement 6-74 of September 24, 1974 of the then National Banking Commission, regulations regarding the conditions related to interbank deposits were established;

That through Agreement 2-78 of February 22, 1978 of the then National Banking Commission, article 4 of Agreement 6-74 was modified;

That in accordance with numeral 2 of article 41 of the Banking Law, international license banks may direct, from an office established in Panama, transactions that are perfected, consummated, or produce their effects abroad, and carry out those other activities authorized by the Superintendence;

That in working sessions of this Board of Directors, the need and convenience of compiling, adapting, and updating the provisions on interbank deposits has been manifested, as well as carrying out certain authorization based on what is provided in numeral 2 of article 41 of the Banking Law regarding those other activities that international license banks may carry out.

AGREES:

ARTICLE 1. SCOPE OF APPLICATION. The provisions of this Agreement shall apply to official banks, general license banks, and international license banks.

Agreement No. 5-2012

ARTICLE 2. INTERBANK DEPOSIT MARKET. The interbank deposit market is considered to be the placement of funds that banks established in Panama carry out among themselves.

ARTICLE 3. PLACEMENT OF INTERBANK DEPOSITS. Banks must comply with the following parameters for the placement of interbank deposits:

1. General license banks may at all times place interbank deposits among themselves.
2. International license banks may at all times place and receive interbank deposits among themselves.
3. International license banks may place interbank deposits in general license banks.
4. General license banks may place funds of external origin in international license banks. In this case, the depositing bank shall certify to the depositary bank the quality of external origin of the funds to be deposited.

ARTICLE 4. TERM OF INTERBANK DEPOSITS. Interbank deposits shall not be subject to the common rules regarding terms and interest rates relative to deposits, and shall be left to the free determination of market demand and supply regarding the conditions of quotation and term of their placements. There shall be no minimum terms in the placement of interbank deposits.

ARTICLE 5. ACTIVITIES OF INTERNATIONAL LICENSE BANKS. For the purposes of what is established in numeral 2 of article 41 of the Banking Law, regarding those other activities that international license banks may carry out, this Superintendence authorizes said banks to acquire Panamanian internal public debt instruments through the securities market of the Republic of Panama.

Public debt may have been issued by the State or by institutions that are state-owned.

ARTICLE 6. SANCTIONS FOR NON-COMPLIANCE. Non-compliance with the provisions established in this Agreement shall be sanctioned in accordance with what is provided by Title IV of the Banking Law.

ARTICLE 7. REPEAL. This Agreement repeals Agreement 6-74 of September 24, 1974, and Agreement 2-78 of February 22, 1978, both of the National Banking Commission.

ARTICLE 8. VALIDITY. This Agreement shall begin to govern from its promulgation.

Given in the City of Panama, on the twenty-fifth (25) day of the month of September of two thousand twelve (2012).

LET IT BE COMMUNICATED, PUBLISHED, AND COMPLIED WITH.

THE PRESIDENT THE SECRETARY
Félix B. Maduro Nicolás Ardito Barletta