Agreement No. 10 (2019) Adding Article 8-A to Agreement No. 6-2009 on Risk Concentration Limits for Economic Groups and Related Parties

Republic of Panama
Banking Superintendence
AGREEMENT No. 010-2019
(of September 24, 2019)
"By which Article 8-A is added to Agreement No. 6-2009, which establishes the rules for Risk Concentration Limits for Economic Groups and Related Parties"

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

CONSIDERING:

That following 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 referred to as the Banking Law;

That in accordance with the provisions of numerals 1 and 2 of Article 5 of the Banking Law, it is the objective of the Banking Superintendence to ensure the maintenance of the solidity and efficiency of the banking system; as well as to strengthen and foster the conditions conducive to the development of the Republic of Panama as an international financial center;

That in accordance with numeral 2 of Article 11 of the Banking Law, it is a technical attribute of the Board of Directors to approve rules of general application for the definition and identification of credits to clients related to each other or related to the banks or banking groups;

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

That Article 95 of the Banking Law prohibits banks and the owners of bank shares in which a banking group is consolidated from granting, directly or indirectly, to a single natural or legal person, including those that form an economic group with them, loans or credit facilities, or granting any guarantee or incurring any other obligation in favor of said person, the total of which exceeds at any time, individually or jointly, twenty-five percent (25%) of the bank's capital funds;

That Article 7 of Agreement No. 6-2009 of June 24, 2009 "By which the rules for Risk Concentration Limits for Economic Groups and Related Parties are established," establishes that the concentration limit in a single person, individually or jointly, is twenty-five percent (25%) of the capital funds established in Article 95 of the Banking Law, having consolidated capital funds as the base for the measurement of said limit;

That through Article 8 of Agreement No. 6-2009 of June 24, 2009, exceptions in the application of the concentration limit in a single person, provided for in Article 7 of the same Agreement, are recognized;

That through Agreement No. 5-2013 of August 13, 2013, Article 1 of Agreement No. 6-2009 of June 24, 2009 is modified, in order to expand the scope and reach of application of said Agreement;

Agreement No. 010-2019

That through Agreement No. 5-2016 of May 13, 2016, Article 8 of Agreement No. 6-2009 is modified, granting the Superintendent the power to allow temporary exceptions for the application of the concentration limit in a single person when it comes to credits granted to companies whose capital is one hundred percent owned by the Panamanian State;

That in working sessions of this Board of Directors, the need and convenience of modifying Agreement No. 6-2009 has been manifested with the purpose of establishing exceptions for the owner of bank shares regarding the application of the concentration limit in a single person.

AGREES:

ARTICLE 1. Article 8-A is added to Agreement No. 6-2009:

"ARTICLE 8-A. EXCEPTIONS FOR THE OWNER OF BANK SHARES.
The following exception is recognized in the application of the limit established in Article 7 of this Agreement to the owner of bank shares of banks for which the Banking Superintendence of Panama is the origin supervisor: when the credit facility is granted in sovereign debt exposures of the country where the banking group has its principal place of business."

ARTICLE 2. VALIDITY. This Agreement shall enter into force from its promulgation.

Given in the city of Panama, on the twenty-fourth (24) day of the month of September of two thousand nineteen (2019).

NOTIFY, PUBLISH, AND COMPLY.

THE AD-HOC PRESIDENT, THE AD-HOC SECRETARY,
Nicolás Ardito Barletta Luis Alberto La Rocca