Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 109/2016

SUBJECT: FINANCIAL ENTITIES MANAGEMENT – MODIFIES THE REGULATION ON INCENTIVES FOR THE COLLECTION OF PROPERTY CREDIT PORTFOLIOS OF THE CENTRAL BANK OF BOLIVIA AND THOSE RECEIVED IN ADMINISTRATION FROM THE FORMER NATIONAL INSTITUTE OF PRE-INVESTMENT (FORMER INALPRE).

VISTOS:

• Law No. 1670 of October 31, 1995.
• Law No. 742 of September 30, 2015.
• Statute of the Central Bank of Bolivia of October 21, 2005.
• Board Resolution No. 065/2015 of April 28, 2015.
• Board Resolution No. 180/2015 of September 22, 2015.
• Board Resolution No. 046/2016 of March 15, 2016.
• Technical Report from the Financial Entities Management BCB-GEF-SRRA-DRCA-INF-2015-65 of June 6, 2016.
• Legal Report from the Legal Affairs Management BCB-GAL-SAJU-DLCC1-INF-2016-85 of June 7, 2016.

CONSIDERING:

That Article 54 subsection o) of Law No. 1670, and Article 11 numeral 29) of the BCB Statute, provide that the Board of Directors has the authority to approve, modify, and interpret the Statute and its Regulations by a two-thirds majority of its total members, without the need for any additional administrative act.

That Board Resolution No. 065/2015 approved the Regulation on Incentives for the Collection of Property Credit Portfolios of the Central Bank of Bolivia and the portfolio in administration of the former National Institute of Pre-investment (Former INALPRE).

That Law No. 742 in its Article 5 instructs the closure of the Trusts for Solution and Transfer Procedures of balances in favor of the BCB.

That through Act No. 07/2016, the Asset Recovery and Realization Committee approved the Draft Modification to the Regulation on Incentives for the Collection of Property Credit Portfolios of the Central Bank of Bolivia and those Received in Administration from the Former National Institute of Pre-investment (EX INALPRE) approved with R.D. No. 065/2015, modified with R.D. No. 180/2015 of 22/09/2015, instructing that it be submitted for consideration and subsequent treatment by the Board of Directors.

That in light of the aforementioned background, it is necessary that Credit Portfolio Recovery policies consider all of the Central Bank of Bolivia's Property portfolios, those Received in Administration, as well as those the Issuing Entity might receive in the future.

That Report BCB-GEF-SRRA-DRCA-INF-2016-65 from the Financial Entities Management recommends modifying R.D. No. 065/2015 so that it aligns with the total of the BCB's property credit portfolios and those received in administration.

That the Legal Affairs Management, in report BCB-GAL-SAJU-DLCC1-INF-2016-85, establishes that it is necessary to expressly expand the application of the incentives provided for in Board Resolution No. 065/2015 and 180/2015 to the new property portfolios of the BCB received under the framework of Law 742 of September 30, 2015, and to others that the Issuing Entity may receive in the future in property or in administration.

That the Legal Affairs Management concludes, in the aforementioned report, that the proposal presented by the Financial Entities Management does not contravene any legal norm and has been approved by the Asset Recovery and Realization Committee; therefore, there is no legal impediment for its consideration and approval by the Board of Directors of the institution, in the exercise of its powers conferred by Article 54 subsections a) and o) of Law 1670 of October 31, 1995, and to approve the proposal to expand the scope of the current incentives for the BCB's property portfolio and those received in administration, to the new credit portfolios received under the framework of Law 742 of September 30, 2015, and others that the BCB might receive in the future, in property or administration, with no legal obstacle to this effect.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Modify Article 1. (Object and Scope of Application) of the Annex titled "Incentives for the Collection of Property Credit Portfolios of the BCB and those Received for Administration from the Former INALPRE" of R.D. No. 065/2015 dated 28/04/2015, as follows:

IT STATES:

Article 1. Object and Scope of Application.

This Regulation aims to facilitate the cancellation of pending payment obligations with the Central Bank of Bolivia for debtors and guarantors of the credit portfolio, allowing such cancellation to be performed by a third party, without this implying automatic subrogation of the debt in their favor.

The scope of application of this Regulation extends to all of the BCB's property portfolio and in administration, in the state in which it is found: current, overdue, and under judicial execution, in the latter case until before the extension of the adjudication deed inclusive, and to the written-off portfolio." (Paragraph modified with R.D. 180/2015)

It includes the credit portfolio of the Banks: Former BBA, Crédito Oruro, Potosí, Del Progreso Nacional, BIDESA (The BIDESA portfolio up to the capital amount that is property of the BCB), San Jose Obrero Cooperative, former INALPRE, as well as the written-off credit portfolio of the Banks Sur, Cochabamba, and International de Desarrollo (BIDESA) of property of the TGN that will be received in dación en pago by the BCB under the framework of D.S. No. 2068.

IT MUST STATE:

**“Article 1. Object

This Regulation aims to facilitate the cancellation of pending payment obligations with the Central Bank of Bolivia for debtors and guarantors of the credit portfolio, allowing such cancellation to be performed by a third party, without this implying automatic subrogation of the debt in their favor.”**

Article 2.- Include a new Article with the following text:

**“Article 1 bis. Scope of Application

This Regulation applies to all of the BCB's property credit portfolio and the portfolio received in administration in the state in which it is found: current, overdue, execution, and written-off. The portfolio under judicial execution, until before the extension of the adjudication deed.

The portfolio comprises the credits received from financial entities that were subject to:

a) Forced Liquidation: Former Banco de Crédito Oruro, Former Banco Potosí, Former Banco del Progreso Nacional, Former Banco Internacional de Desarrollo up to the amount of capital returned to the BCB, Former Cooperativa San Jose Obrero LTDA, and Former Banco Sur (Portfolio of property of the TGN).

b) Forced Sale: Former Banco Boliviano Americano

c) Solution Procedure: Former Mutual La Frontera, Former Mutual Manutata, Former Mutual Del Pueblo, Former Mutual Tarija, and Former Cooperativa TRAPETROL.

d) Portfolio in Administration: Former Instituto Nacional del Pre Inversión.”**

Article 3.- This Board Resolution shall enter into force on the day of its approval.

Article 4.- Repeal Board Resolution No. 180/2015 of September 22, 2015, from the effective date of this Resolution.

Article 5.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, June 14, 2016

Marcelo Zabalaga Estrada

Sergio Velarde Vera

Ronald Polo Rivero

Abraham Pérez Alandia

Luis Baudoin Olea