Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 100/2019

SUBJECT: FINANCIAL ENTITIES MANAGEMENT APPROVES REGULATION OF INCENTIVES FOR RECOVERY OF CLAIMS OF THE CENTRAL BANK OF BOLIVIA UNDER ARTICLE 6 OF LAW NO. 1206 OF AUGUST 5, 2019.

VIEWING:

• The Political Constitution of the State (CPE), promulgated on February 7, 2009.
• Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB).
• Law No. 1977 of May 14, 1999, Law Modifying Legal Provisions of the Financial System.
• Law No. 742 of September 30, 2015, of Modifications to the General State Budget – Management 2015.
• Law No. 1206 of August 5, 2019, of Modifications to the General State Budget – Management 2019.
• Supreme Decree No. 21660 of July 10, 1987.
• Supreme Decree No. 25336 of March 29, 1999.
• Supreme Decree No. 2068 of July 30, 2014.
• Supreme Decree No. 3143 of April 12, 2017.
• Agreement for the Administration of Pre-investment Funds of May 3, 1988.
• Compliance Agreement for Supreme Decree No. 2068 of September 8, 2014.
• Resolution SB No. 053/99 of May 14, 1999 of the Superintendence of Banks and Financial Entities (SBEF) currently the Financial System Supervisory Authority (ASFI).
• Note SB/Document 19743 of May 14, 1999 of the SBEF.
• Note from the Ministry of Development Planning MPD/DGAJ/EXT No. 168/2012 of June 19, 2012.
• The Statute of the BCB approved by Board Resolution No. 128/2005 of October 21, 2005 and its modifications.

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• Act No. 15/2019 of the meeting held on August 12, 2019 of the Recovery and Asset Realization Committee.
• Technical Report from the Financial Entities Management BCB-GEF-SRRA-DRCA-INF-2019-10 of August 8, 2019.
• Legal Report from the Legal Affairs Management BCB-GAL-SAJU-DLCC1-INF-2019-221 of August 9, 2019.

CONSIDERING:

• That article 327 of the CPE establishes that the BCB is a public law institution, with legal personality and its own assets. Within the framework of the State's economic policy, it is the function of the BCB to maintain the stability of the internal purchasing power of the currency, to contribute to economic and social development.
• That Law No. 1670 in its article 1 provides that the BCB is the sole monetary and exchange authority of the country, with administrative, technical and financial competence and specialized normative powers of general application, in the manner and, with the scope established in the Law.
• That article 44 provides that the highest authority of the BCB is its Board of Directors, which is responsible for defining its policies, specialized normative provisions of general application and internal rules; as well as establishing administrative, operational and financial strategies of the BCB, approving their respective short and medium-term programs. For the follow-up and oversight of their execution, it will have independent information, analysis and audit services.
• That subsections a) and o) of article 54, provides that the Board of Directors of the BCB has the attributes to issue norms and adopt general decisions that may be necessary for the BCB to fulfill its functions, competencies and powers assigned by Law; and to approve, modify and interpret the Statute and Regulations of the BCB, by two-thirds of the votes of all its members, without the need for any additional administrative act.

CONSIDERING:

• That Law No. 1977 in its article 3 modified paragraph II of article 120 of Law No. 1488 on Banks and Financial Entities, providing that for the intervention and forced sale of a functioning financial entity, the Superintendent will appoint a Selling Superintendent and may request the BCB to provide financial support for said process.

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• That Resolution SB No. 053/99 of the SBEF in its item 4 resolves to initiate the forced sale process with the financial support of the BCB in accordance with the norms provided in Law No. 1977 and other related norms.
• That Note SB/Document 19743, evidences that the SBEF requested financial support from the BCB for the forced sale process of the Bolivian American Bank.

CONSIDERING:

• That Supreme Decree No. 21660 in its article 193 provides for the dissolution of the National Pre-investment Institute (INALPRE) and that the current assets and liabilities of said Institute be transferred to the BCB and form part of a pre-investment credit line.
• That Supreme Decree No. 25336 in its Article 3, authorizes the BCB to recover the portfolio belonging to the former National Pre-investment Institute (Former INALPRE), under the incentive and penalty conditions determined by its board for the collection of the delinquent portfolio received in payment in kind by the issuing institute.
• That the Agreement for the Administration of Pre-investment Funds signed between the BCB and the Former Ministry of Planning and Coordination, establishes the responsibility of the BCB to recover the credit portfolio granted by the former INALPRE.
• That the note from the Ministry of Development Planning MPD/DGAJ/EXT No. 168/2012, states that the BCB has the attribute to adopt the necessary provisions for portfolio recovery and establish incentive policies in the recovery of the portfolio that public and private sector entities maintain with the Former INALPRE.

CONSIDERING:

• That Law No. 742 in paragraphs I and IV of its article 5 provides for the closure and definitive liquidation of the Trusts for Solution Procedures of the Former – Mutual La Frontera, Former – Mutual Manutata, Former – Mutual Tarija, Former – Mutual del Pueblo and Former – Cooperative Trapetrol Ltda., and their transfer free of charge, in the state in which they are found, in favor of the BCB, including the written-off portfolio.
• That Supreme Decree No. 2068 in its articles 1 and 2, establishes the conditions and prior actions to the preparation of the Final Closing Balance of the liquidation processes of Banco Sur S.A., Banco Cochabamba S.A. and Banco Internacional de Desarrollo S.A. and their transfer to the Central Bank of Bolivia as payment in kind for out-of-court claims, including written-off portfolio balances and those assets that were not effectively delivered to the General Treasury of the Nation.
• That the Compliance Agreement for Supreme Decree No. 2068, in its fourth clause establishes that its object is to agree on the terms of the transfer of assets of Banco Sur

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S.A. to the BCB in compliance with the provisions contained in Supreme Decree No. 2068, in which the conditions and prior actions to the preparation of the Final Closing Balance of the liquidation process of Banco Sur S.A. are established, to allow the conclusion of the liquidation process of said entity.

• That Supreme Decree No. 3143 in paragraph I of its article 2 authorizes the Financial System Development Fund and Support for the Productive Sector – FONDESIF, to cede free of charge, in favor of the BCB, the credit portfolio originated in the former Bolivian American Bank S.A., including the written-off credit portfolio and its respective accessories.

CONSIDERING:

• That Law No. 1206 “Law of Modifications to the General State Budget – Management 2019”, in its article 6 provides that the incentives for the recovery of claims, through the forgiveness of current and penal interest, fines, commissions and other accessory expenses, which the BCB applies to non-linked credit portfolios of financial intermediation entities in liquidation that were transferred to it, by virtue of specific Laws and Supreme Decrees, can only be carried out on credit obligations, whose outstanding capital balance is equal to or less than USD 15,000.00 (Fifteen Thousand 00/100 United States Dollars) or its equivalent in national currency, within a period of one year from the publication of the aforementioned Law.
• That the Statute of the BCB approved by Board Resolution No. 128/2005 in items 1, 2 and 29 of its article 11 establish that the Board of Directors of the Issuer Entity has the attributes to approve general decisions and issue the norms that may be necessary for the BCB to fulfill the functions, competencies and powers assigned to it by Law; define the policies of the BCB, specialized normative provisions of general application and internal rules; as well as approve and modify Regulations of the BCB, by two-thirds of all its members, without the need for any additional administrative act.
• That in its item 44) it entrusts the General Manager to elaborate, in coordination with Area Managers, the necessary regulation for the implementation of laws and general norms, as well as for the timely execution of Board decisions, in the areas of their respective competencies.
• That item 36) authorizes the Board to alienate and administer portfolio and assets received in payment in kind from banks in liquidation.
• That the Recovery and Asset Realization Committee, in a meeting held on August 12, 2019 and through Act No. 15/2019, approved the Draft Regulation of Incentives for Recovery of Claims of the Central Bank of Bolivia within the framework of article 6 of Law No. 1206 of August 5, 2019 and authorized its presentation to the Board for its consideration and approval.

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• That the report from the Financial Entities Management BCB-GEF-SRRA-DRCA-INF-2019-10 states that to comply with article 6 of Law No. 1206 of August 5, 2019 modifying the General State Budget – Management 2019, it is necessary to have a Regulation that allows the implementation of incentives for the recovery of BCB claims, said Regulation will benefit approximately 80% of debtors whose capital balances are less than or equal to USD 15,000, therefore it is submitted for approval by the Board.
• That the Legal Affairs Management in report BCB-GAL-SAJU-DLCC1-INF-2019-221, establishes that the proposed Regulation by the Financial Entities Management does not contravene any legal norm, therefore there is no legal impediment for its consideration and approval by the Board, which within the framework of its powers established in Law No. 1670 and its Statute has the attribute to consider and approve incentives for portfolio payment, with the favorable vote of two-thirds of all its members.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Within the framework of what is established in article 6 of Law No. 1206/2019, approve the Regulation of Incentives for Recovery of Claims of the Central Bank of Bolivia, which, in the annex, forms an integral part of this Resolution, valid until August 7, 2020.

Article 2.- The Presidency and the General Management are in charge of the execution and compliance of this Resolution.

La Paz, August 13, 2019.

Pablo Ramos Sánchez
Gabriel Herbas Camacho
Sergio Velarde Vera

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Abraham Pérez Alandia
Ronald Polo Rivero
Luis Baudoin Olea

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ANNEX

REGULATION OF INCENTIVES FOR RECOVERY OF CLAIMS OF THE CENTRAL BANK OF BOLIVIA WITHIN THE FRAMEWORK OF ARTICLE 6 OF LAW NO. 1206 OF AUGUST 5, 2019

Article 1. (Object).

This Regulation has the object of establishing the collection procedure provided for in article 6 of Law No. 1206 of August 5, 2019 of modifications to the General State Budget – Management 2019.

Article 2. (Scope of application).

The scope of application of this Regulation extends to credit obligations whose outstanding capital balance is equal to or less than USD 15,000 (Fifteen Thousand 00/100 United States Dollars) or its equivalent in national currency of the credit portfolios corresponding to the following financial entities in liquidation: Banco de Crédito Oruro S.A., Banco Potosí S.A., Banco del Progreso Nacional S.A.M., Cooperativa San José Obrero Ltda., Bolivian American Bank S.A. including the portfolio ceded by FONDESIF, BIDESÁ (in administration of the BCB), Banco Sur S.A., Mutual La Frontera, Mutual Manutata, Mutual Tarija, Mutual Del Pueblo, Cooperative Trapetrol, and the credit portfolio of the Former INALPRE administered by the BCB.

Article 3. (Incentives for Recovery of Claims).

The incentives for the recovery of claims, through the forgiveness of current and penal interest, fines, commissions and other accessory expenses, which the BCB applies to the non-linked credit portfolios of financial intermediation entities in liquidation that were transferred to it in application of specific Laws and Supreme Decrees, applies according to the following scale:

Capital Balance expressed in USD	Forgiveness of Current Interest	Forgiveness of Penal, Late and Other Charges* Interest
Less than or equal to 500	95%	100%
Greater than 500 up to 1,000	90%	100%
Greater than 1,000 up to 5,000	85%	100%
Greater than 5,000 up to 15,000	80%	100%

(*) Refers to publications, forms and insurance.

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Article 4. (Payment Conditions).

I. Debtors of the credit portfolios indicated in article 2 of this Regulation to qualify for the forgiveness must cancel their debt in a single payment and in cash, at the official exchange rate in force on the date of payment.

II. The payment may be made by a third party without this meaning automatic subrogation of the debt.

Article 5. (Of the Payment of the Obligation).

I. Those interested in qualifying for the forgiveness must request the amount of the debt from the BCB on the date of payment, presenting the original of their valid identity document and in cases of requests in which the BCB does not have regional offices, the request may be made via telephone.

Subsequently, they must make their payment in BCB or Banco Unión S.A. cashiers and send a copy of the payment slip to the Financial Entities Management of the BCB. Once the cancellation of the debt is credited, the BCB will proceed with the procedures to release the debtor and guarantors of the obligation.

II. In the event that debtors or guarantors have more than one obligation with the BCB, the forgiveness will be applied per credit.

III. The forgiveness extends to credits with judicial collection actions at any procedural stage until before the judicial approval of the auction of the guarantee.

IV. Credits that have the auction of goods approved by a judicial authority may only qualify for the forgiveness for the balance of the credit that results once the amount resulting from the auction of goods has been applied.

Article 6. (Exclusions from forgiveness).

I. The forgiveness established in article 3 of this Regulation does not exempt from the payment of professional fees of external lawyers, nor judicial expenses during the processing of the credit collection process, which must be paid in full.

II. The forgiveness does not apply to the current interest of the credit portfolio of the Former BBA received in payment in kind by the financial support of the BCB.

III. Judicial deposits pending application up to the date of approval of this Regulation, due to judicial withholdings or auctions of goods, are not covered by the forgiveness provided for in Article 3 of this Regulation.

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IV. The forgiveness does not apply to credits classified as linked by Law No. 1488 that were delivered to the BCB.

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