Superintendency of Banks and Other Financial Institutions

REPUBLIC OF NICARAGUA - CENTRAL AMERICA

Resolution No. CD-SIBOIF-616-3-FEB24-2010
Dated 24 February 2010

AMENDMENT TO ARTICLES 42 AND 47 OF THE STANDARD ON CREDIT RISK MANAGEMENT

The Board of Directors of the Superintendency of Banks and Other Financial Institutions,

SOLE RECITAL

That based on the power granted to it by article 3, numerals 3 and 13, and article 10, numeral 7, of Law 316, Law of the Superintendency of Banks and Other Financial Institutions, and its amendments contained in Law 552, Law of Amendments to the aforementioned Law 316;

In exercise of its powers,

HAS ISSUED

The following,

CD-SIBOIF-616-3-FEB24-2010

AMENDMENT TO ARTICLES 42 AND 47 OF THE STANDARD ON CREDIT RISK MANAGEMENT

First: Amend articles 42 and 47 of the Standard on Credit Risk Management, contained in Resolution No. CD-SIBOIF-547-1-AGOST20-2008, dated 20 August 2008, which shall read as follows:

Art. 42 Valuation.- Real estate received in payment or adjudicated shall be valued in full at least once a year, unless there is evidence that an impairment loss has occurred.

The valuation of said assets shall be based on the estimate of the realization value in accordance with the regulations governing the matter of appraisers providing services to institutions of the Financial System.

All assets whose book value is greater than the equivalent in national currency or foreign currency of one hundred thousand dollars (US$100,000.00), must have valuations performed by appraisers independent of the financial institution, duly registered in the Superintendency's Registry of Appraisers, with the exception of assets located outside the country.

Managua, Nicaragua

SIBOIF Building - Km. 7 Carretera Sur

Telephone PBX: 2265-1555 P.O. Box 788

web: www.siboif.gob.ni

Email: correo@siboif.gob.ni

The valuations and supporting records shall be available to the Superintendent for review. The financial institution shall report, by means of a detailed list, all assets received in payment or adjudicated and their respective recorded amounts, with the frequency established in the "Official Information Calendar" sent to all supervised entities. The real estate included in the aforementioned list shall be reflected indefinitely, as long as the sale thereof is not made.

Art. 47 Write-off.- All loans shall be written off in accordance with the provisions of the respective Single Chart of Accounts (MUC), on the days of arrears detailed below:

a) Consumer loans, on the one hundred and eighty-first (181) day of arrears. The financial institution may write off a consumer loan on day 360, when said loan has constituted real guarantees referred to in numerals 1), 3) (machinery and vehicles only) and 5) of literal b) of article 30 of this standard, whose appraised realization value is equal to or greater than one hundred percent (100%) of the outstanding balance and are in the process of judicial collection.

b) Mortgage loans for housing, microcredits and commercial loans on the three hundred and sixtieth (360) day of arrears. Excepted are mortgage loans for housing, microcredits and commercial loans that have constituted real guarantees eligible as risk mitigants referred to in numeral 1), literal b) of article 30 of this standard, whose appraised realization value is equal to or greater than one hundred percent (100%) of the outstanding balance, provided they are in the process of judicial collection.

For control purposes, the Financial Institution shall keep for a period of no less than five years, records in Order Accounts of the balances originating from the write-offs made. In the event there are real estate assets received in payment or adjudicated related to written-off loans, the financial institution shall keep the aforementioned records in Order Accounts indefinitely, until the sale thereof is made.

Second: This standard shall enter into force upon its notification without prejudice to its publication in the Official Gazette, La Gaceta.

Irrelevant parts follow. (f) A. Rosales B. (f) V. Urcuyo (f) Gabriel Pasos Lacayo (f) Fausto Reyes B. (f) illegible (Silvio Moises Casco Marenco) (f) U. Cerna Barquero. Secretary.

URIEL CERNA BARQUERO
Secretary Board of Directors SIBOIF