Board Resolution No. 074/99

BOARD RESOLUTION NO. 074/99

SUBJECT: FINANCIAL SYSTEM – SETTLEMENT OF THE CREDIT LINE GRANTED ON MAY 16, 1999 TO THE INTERVENED BBA FOR FORCED SALE.

HAVING REVIEWED:

Law No. 1670 of October 31, 1995.
Law No. 1977 of May 14, 1999.
Resolution SB No. 053/99 of the Superintendency of Banks and Financial Entities (SBEF) dated May 14, 1999.
Board Resolution of the Central Bank of Bolivia (BCB) No. 039/99 of May 16, 1999.

The Credit Line Opening Contract signed between the BCB and the Selling Intendancy of Banco Boliviano Americano S.A. (BBA) on May 17, 1999, as well as its Addendum dated May 19 of the current year.

Note IV-FCU-184/99 from the Deputy Selling Intendant of the BBA dated September 10, 1999.
Report from the Financial System Management SGA No. 151/99 of September 13, 1999.

Note from the Legal Affairs Unit UAJUR 600/99 of September 13, 1999.

CONSIDERING:

That Law 1670, in its Article 86, authorizes the BCB to receive assets in payment of debts, a principle that has also been incorporated by Supreme Decree No. 25382 of May 14, 1999, Regulatory of Law 1977, regarding financial support for intervention processes of financial intermediation entities for their forced sale.

That the Central Bank of Bolivia, in application of Law 1977 and through Board Resolution No. 039/99, granted the BBA on May 17, 1999 a Financial Support Credit Line for the process of its forced sale for $50,000,000 USD, which was increased to $80,000,000 USD according to Act No. 023/99 of the Extraordinary Board Meeting of May 18, 1999 and which was incorporated into the Contract through the Addendum of May 19, 1999.

That both the Credit Line Contract and its respective Addendum establish a maximum validity period of 120 calendar days computable from May 17, 1999, that is, with maturity on September 14, 1999.

That the principal debtor balance of said credit line on September 14, 1999 is $29,705,160.60 USD.

That the Selling Intendant of Banco Boliviano Americano S.A., through note IV-FCU-184/99 of September 10, 1999, has requested an extension of the credit line by an additional 90 days, while the intervention process of the BBA for its forced sale concludes.

That the Financial System Management indicates the convenience to execute and proceed with the settlement of the aforementioned Credit Line, as its extension would imply increasing the exposure risk that the Central Bank of Bolivia has against the other creditors of the BBA. It also recommends the receipt of a greater amount of assets, up to an amount of $34 million USD, while the price of these is defined through the Audit commissioned by the BBA to the firm KPMG Peat Marwick Auditors & Consultants.

That in the opinion of the Legal Affairs Unit, the Central Bank of Bolivia in application of the Credit Line Contract must proceed to its extinction on the date of maturity. In contracts for the transfer of assets in payment of debts to the BCB, a conditional price clause will be agreed upon until the definitive valuation of the received assets is carried out.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Deny the request for extension of the term of the Credit Line Contract signed between the BBA and the BCB on May 17, 1999 and, consequently, authorize the Administration to execute and settle said contract on the date of its maturity.

Article 2.- Authorize the Administration of the BCB to select the assets owned by the BBA that will be received in payment of the Credit Line, which must have a coverage in book value of up to $34 million USD, while the process of valuation of the assets that the BBA carries out in compliance with Law 1977 concludes. To this effect, the contracts for the transfer of assets ceded in payment of debts to the BCB will have a conditional price clause, until the verification of the valuation of the assets and conclusion of the audit commissioned to the firm KPMG Peat Marwick Auditors & Consultants.

Article 3.- The cancellation of the credit line, through the transfer of assets in payment of debts, will be recorded in the BCB against transitional accounts until the external audit mentioned in Article 2 determines the definitive value of the assets.

Article 4.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, September 13, 1999

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Juan Antonio Morales A.

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Armando Pinell S.

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Jaime Ponce G.

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Juan Medinaceli

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Fernando Campero P.

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Armando Méndez M.