Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 146/2014

SUBJECT: FINANCIAL ENTITIES MANAGEMENT – REGULATION FOR THE DISPOSITION OF ASSETS TRANSFERRED AS PAYMENT IN KIND BY THE BANKS SUR S.A., COCHABAMBA S.A. AND BANCO INTERNACIONAL DE DESARROLLO S.A. IN LIQUIDATION AND OTHER ASSETS ADJUDICATED JUDICIALLY.

VIEWED:

• Law No. 1670 of October 31, 1995.
• Law No. 3252 of December 8, 2005.
• Supreme Decree No. 29889 of January 23, 2009.
• Supreme Decree No. 2068 of July 30, 2014.
• ASFI Resolution No. 574/2014 of August 22, 2014.
• Report from the Financial Entities Management BCB-GEF-SRRA-INF-2014-10 of October 17, 2014.
• Report from the Legal Affairs Management BCB-GAL-SAJU-INF-2014-207 of October 17, 2014.

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 Regulations, by two-thirds of its total members, without the need for any additional administrative act.

That Law No. 3252 of December 8, 2005, in its Article 5, provides that the Executive Power shall regulate through Supreme Decree the closure of the liquidation processes of Banco Sur S.A., Banco de Cochabamba S.A., and Banco Internacional de Desarrollo S.A., establishing the treatment of the remaining assets of said Liquidated Banking Entities.

That Supreme Decree No. 29889 of January 23, 2009, which regulates Article 5 of Law No. 3252, establishes the definitive closure of the liquidation processes of Banco Sur S.A., Banco de Cochabamba S.A., and Banco Internacional de Desarrollo S.A.

That Supreme Decree No. 2068 of July 30, 2014, in its Article 2, establishes that the Liquidated Banks Sur S.A., Cochabamba S.A., and Internacional de Desarrollo S.A. shall transfer to the Central Bank of Bolivia the assets registered in their respective General Balance Sheets, including the balances of the Write-off Portfolio and those assets that were not effectively delivered to the General Treasury of the Nation.

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That said Supreme Decree No. 2068, in its Additional Provision First, establishes that within the framework of Law No. 3252 of December 8, 2015, the BCB is expressly authorized to proceed with the disposition of assets received as payment in kind and judicially adjudicated assets within the received portfolio, under the terms, form, conditions, and values determined by its Board of Directors, through express Resolution.

That in attention to and compliance with said Supreme Decree No. 2068, it is necessary to have a regulation that allows the application and execution of said Supreme Decree.

That the report from the Financial Entities Management BCB-GEF-SRRA-INF-2014-10 indicates that within the framework of the provisions of D.S. 2068 of July 30, 2014, it is necessary to have a Regulation that defines the modalities and procedures to be followed for the disposition of assets coming from the Liquidated Banks, Sur, BIDES A, and Cochabamba.

That the report from the Legal Affairs Management BCB-GAL-SAJU-INF-2014-207 establishes that the draft Regulation for the Disposition of Realizable Assets from Liquidated Banks, Sur S.A., Cochabamba S.A., and Internacional de Desarrollo S.A. does not contravene any legal norm, therefore there is no legal objection to its consideration and subsequent approval, being the attribution of the Board of Directors of the Central Bank of Bolivia to consider and approve the cited Regulation with the favorable vote of two-thirds of its total members.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the Regulation for the Disposition of Assets Transferred as Payment in Kind by the Banks Sur S.A., Cochabamba S.A., and Banco Internacional de Desarrollo S.A. in Liquidation and Other Judicially Adjudicated Assets, effective from the date of this resolution.

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

La Paz, October 21, 2014

Marcelo Zabalaga Estrada

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Abraham Pérez Alandia
Alvaro Rodríguez Rojas
Reynaldo Yujra Segales
Ronald Polo Rivero

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ANNEX

REGULATION FOR THE DISPOSITION OF MOVABLE AND IMMOVABLE ASSETS TRANSFERRED AS PAYMENT IN KIND BY THE LIQUIDATED BANKS SUR S.A., COCHABAMBA S.A. AND BANCO INTERNACIONAL DE DESARROLLO S.A. AND OTHER JUDICIALLY ADJUDICATED ASSETS.

CHAPTER I

GENERAL PROVISIONS

Article 1.- Object and Scope of Application.

This Regulation aims to regulate the procedures for the disposition of movable and immovable assets transferred as payment in kind against out-of-court claims of the Liquidated Banks (Sur S.A., Cochabamba S.A., and Internacional de Desarrollo S.A.), as well as those assets that the Central Bank of Bolivia adjudicates judicially or receives in payment of obligations arising from the credit portfolio ceded by said liquidated banks, through Supreme Decree No. 2068.

CHAPTER II

ORGANIZATIONAL STRUCTURE FOR THE DISPOSITION OF ASSETS

Article 2.- Recovery and Asset Realization Committee for Liquidated Banks.

The Recovery and Asset Realization Committee for Liquidated Banks (Committee) is the instance designated by the Board of Directors of the Central Bank of Bolivia to execute the asset disposition procedure under the terms set forth in this Regulation.

Likewise, it is the designated instance responsible by the Central Bank of Bolivia (BCB) for the supervision and control of the disposition of assets received as payment in kind and all assets arising from judicial adjudications for the recovery of the credit portfolio of said entities.

The Committee shall be composed of:

• A Director who shall act as President.
• General Manager,
• Financial Entities Manager,
• Legal Affairs Manager,

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• Deputy Manager of Legal Affairs, and
• Deputy Manager of Recovery and Asset Realization, who shall act as Secretary of the Committee.

Decisions of the Committee shall be taken by vote of all its present members, by simple majority, which shall be recorded in minutes, and through recommendations, it may suggest to the Board of Directors that it issue resolutions, when appropriate, on matters of asset disposition.

The Committee shall hold ordinary or extraordinary meetings at the request of the President or Secretary of said Committee, to discuss matters regarding asset disposition.

In the event of absence for force majeure reasons of the Director, the General Manager shall preside over the meetings, acting as President.

The quorum to hold an ordinary or extraordinary meeting is four members; in case of tied votes, the vote of the Committee Presidency shall prevail.

Article 3.- Financial Entities Management.

The Financial Entities Management is the executive unit for the disposition of realizable assets and is the link with the Committee. All information and requirements of the Committee shall be channeled through said Management.

Article 4.- Asset Realization Department.

The Asset Realization Department, a unit dependent on the Deputy Manager of Recovery and Asset Realization of the Financial Entities Management, is the direct operational and technical level in charge of the disposition of realizable assets.

Article 5.- Legal Affairs Management.

The Legal Affairs Management is the legal operational level that will coordinate the asset disposition activities.

It will carry out the necessary procedures to complete sufficient documentation for the perfection of ownership rights and disposition of the assets, regarding legal documentation such as obtaining real folios, public deeds, obtaining legalized photocopies, and others within its competence.

CHAPTER III

FUNCTIONS AND RESPONSIBILITIES

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Article 6.- Functions and Responsibilities of the Recovery and Asset Realization Committee.

The functions and responsibilities of the Committee, based on technical and legal reports, are to propose to the Board of Directors the disposition of the assets and initiate the respective procedure.

Article 7.- Functions and Responsibilities of the Financial Entities Management.

The functions and responsibilities of the Financial Entities Management, by itself and through the Deputy Manager of Recovery and Asset Realization and the Asset Realization Department regarding asset disposition, are the following:

a) Make the necessary payments for the perfection of ownership rights and others that formalize the asset for its disposition and physical possession, in coordination with the Legal Affairs Management. In case of judicial adjudication, expenses covered by the Financial Entities Management shall be made from the order approving the auction.

b) Present to the Committee the initiation of the asset disposition process.

c) Make the payment of necessary services for the assets, until their final disposition.

d) Carry out, in coordination with the Deputy Manager of Institutional Communication and Public Relations, and Legal Affairs Management, the actions for the disposition of assets.

e) Report the adjudication and disposition of assets to the Committee quarterly.

f) Require, when necessary, appraisals of movable and immovable assets for their disposition.

Article 8.- Functions and Responsibilities of the Legal Affairs Management.

The functions and responsibilities of the Legal Affairs Management, regarding asset disposition, are the following:

a) Process the perfection of ownership rights of assets adjudicated in the judicial portfolio recovery under its administration and of assets received as payment in kind.

b) Deliver to the Financial Entities Management all documents of the adjudicated assets once the perfected ownership right is available, for their disposition.

c) Send quarterly reports to the Committee on the status of assets pending perfection of ownership rights.

d) Budget and execute the necessary resources for the payment of judicial expenses up to the order approving the auction.

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CHAPTER IV

ON EXPENSES FOR THE PERFECTION OF OWNERSHIP RIGHTS

Article 9.- On the necessary expenses for the perfection of ownership rights.

The resources necessary for the perfection of ownership rights, accrued taxes on adjudicated assets, and others necessary that demand the formalization of the asset for its sale, shall be budgeted and executed by the Financial Entities Management for assets received as payment in kind and for those adjudicated judicially from the order approving the auction.

CHAPTER V

DISPOSITION OF ASSETS RECEIVED FROM THE LIQUIDATED BANKS SUR S.A., BANCO DE COCHABAMBA S.A. AND BANCO INTERNACIONAL DE DESARROLLO S.A. AND OTHER JUDICIALLY ADJUDICATED ASSETS

SECTION I

GENERAL PROVISIONS

Article 10.- Object and Scope of Application.

Through this chapter, the disposition of movable and immovable assets, realizable, owned by the Central Bank of Bolivia, received as payment in kind from the Liquidated Banks, Sur S.A., Cochabamba S.A., and Banco Internacional de Desarrollo S.A., through Supreme Decree No. 2068, as well as those assets that are judicially adjudicated within the portfolio received from these liquidated banks, are regulated.

SECTION II

ON THE MODALITIES OF DISPOSITION OF ASSETS

Article 11.- On the Modalities of asset disposition.

The Recovery and Asset Realization Committee, based on reports from the Financial Entities and Legal Affairs Managements for all or each of the assets, shall propose, in accordance with this regulation, for approval by the Board of Directors, one of the following forms of asset disposition:

a) Direct Sale of immovable assets to public sector entities.

b) Sale by Public Invitation of immovable assets to public sector entities.

c) Auction by open bid, where natural or legal persons, private or public sector, may participate.

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SECTION III

DIRECT SALE OF IMMOVABLE ASSETS TO PUBLIC SECTOR ENTITIES

Article 12.- On the Direct Sale of immovable assets to public sector entities.

The direct sale to public sector entities is that carried out by the Central Bank of Bolivia only to public sector entities, of those immovable assets it has received from the Liquidated Banks, Sur S.A., Cochabamba S.A., and Banco Internacional de Desarrollo S.A., whether or not provided for, or those adjudicated judicially in judicial processes for the recovery of credit portfolios of said banks, based on technical-legal justifications provided by the interested public entity for the acquisition of the asset.

For this type of sale, the Board of Directors, based on a report prepared by the Committee, shall establish the immovable assets that will be subject to this type of direct sale, which may be one or several immovable assets.

The Board of Directors, based on the Committee's report, may determine that the sale modalities by public invitation or auction by open bid be carried out directly, without it being necessary to carry out the direct sale modality.

Article 13.- On the value of the assets.

The price for Direct Sale shall be fixed, which shall be determined based on:

a) Value of the transferred immovable assets without provision, whose expert technical appraisal is not older than two years, at the time of approval by the BCB Board of Directors of this modality, which shall be proposed by the Committee.

b) Value of adjudication or payment in kind of the immovable assets received without provision, whose records are at adjudication or payment in kind values and are not older than 7 years, at the time of approval by the BCB Board of Directors of this modality, which shall be proposed by the Committee.

c) Commercial value, for the rest of the immovable assets, which shall be established through expert technical appraisal to be carried out by an expert registered with the Central Bank of Bolivia or an expert registered with Banco Unión S.A., whose age must not be greater than two years.

In subsections a) and b), maintenance, renovation, custody, disposition, and perfection of ownership rights expenses for these assets shall be added to the base price.

Article 14.- On the call for direct sale

Once the direct sale modality is approved by the Board of Directors, the Recovery and Asset Realization Committee shall instruct the Financial Entities Management to prepare the public call, with the following content:

a) Identification of the immovable assets.

b) Invitation to public entities to submit technical-legal reports justifying the need to request the acquisition of the immovable asset.

c) Description, current situation, and base price of the immovable assets to be disposed of.

d) Address, date, and time for the exhibition of the immovable assets, consultations, and holding of the envelope opening act.

e) Deadline for submission of proposals and technical-legal reports.

f) Schedule for the direct sale by public invitation.

g) Deadline for payment of the asset value in case of adjudication.

h) Date of communication of the invitation result.

Article 15.- On the publication for Direct Sale.

The calls shall be published only once in the Official Gazette of Calls and in a newspaper of national circulation, with an advance of (10) business days before the date set for the submission of proposals and technical-legal reports.

Article 16.- On the submission of proposals and technical-legal reports.

The Financial Entities Management shall be responsible for the receipt of envelopes with proposals and technical-legal reports at the place and date established in the call, for which effect it must keep a chronological record of the receipt of proposals and technical-legal reports, which must be closed upon conclusion of the term, in the presence of a Notary Public.

Article 17.- On the Proposal Opening Commission.

The Recovery and Asset Realization Committee of Direct Administration shall designate three of its members to form a Commission in charge of carrying out all operational acts of this modality, including the public act of envelope opening in which a Notary Public will participate.

Article 18.- Qualification of Proposals.

The qualification of all proposals and technical-legal reports received in accordance with the public call for Direct Sale of immovable assets shall be carried out by the Administration and Asset Realization Committee, who shall elevate to the Board of Directors of the Central Bank of Bolivia, a report of the proposals and reports that meet the adjudication criteria, so that it issues an Adjudication Resolution.

Article 19.- On the criteria for the adjudication of the asset.

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The Committee for the qualification of proposals must take into account the technical-legal reports presented by the interested public entities, which must expose and justify:

a) The contribution to the goals of the Plurinational State.

b) The contribution to improving the quality of life and vivir bien (living well) of Bolivian women and men.

c) The growth of the public entity.

d) The use of the asset to be acquired.

e) And others that the entity deems convenient to expose and justify.

Article 20.- Adjudication of the immovable asset

The adjudication shall be carried out through an express Resolution of the Board of Directors, provided that the offer is equal to the price fixed for the asset, which shall be notified to the adjudicated entity.

Article 21.- Form of payment.

The adjudicated entity must pay the amount corresponding to the adjudicated asset within 30 calendar days following the notification of the adjudication.

In case of non-payment within the established term, the Board of Directors may consider for adjudication another entity that had submitted its proposal and met all requirements.

Once the asset is adjudicated by the Board of Directors, the Financial Entities Management shall make the respective charge and delivery of the asset.

All transfer expenses are borne by the Institution that was awarded the asset.

Article 22.- On the declaration of unsuccessful direct sale.

In the absence of bidders, the commission shall declare the call for direct sale unsuccessful, and the Recovery and Asset Realization Committee for Liquidated Banks shall proceed with the disposition modality determined by the Board of Directors.

SECTION IV

SALE BY PUBLIC INVITATION OF IMMOVABLE ASSETS TO PUBLIC SECTOR ENTITIES.

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Article 23.- On the Sale by Public Invitation of immovable assets to public sector entities.

It is the sale carried out by the Central Bank of Bolivia, of those immovable assets it has received from the Liquidated Banks, Sur S.A., Cochabamba S.A., and Banco Internacional de Desarrollo S.A., or those adjudicated judicially in judicial processes for the recovery of credit portfolios of said banks, sale that will be carried out through public invitation by the Central Bank of Bolivia to possible interested parties who can only be public sector entities.

Article 24.- On the value of the assets.

The base price of the immovable assets subject to sale by public invitation shall correspond:

a) To the value of the transferred immovable assets without provision, whose expert technical appraisal is not older than two years, at the time of approval by the BCB Board of Directors of this modality, which shall be proposed by the Committee.

b) To the value of adjudication or payment in kind of the immovable assets received without provision, whose records are at adjudication or payment in kind values and are not older than 7 years, at the time of approval by the BCB Board of Directors of this modality, which shall be proposed by the Committee.

c) For the rest of the immovable assets, to the commercial value established through expert technical appraisal to be carried out by an expert registered with the Central Bank of Bolivia or an expert registered with Banco Unión S.A., whose age must not be greater than two years.

In subsections a) and b), maintenance, renovation, custody, disposition, and perfection of ownership rights expenses for these assets shall be added to the base price.

Article 25.- On the call by public invitation.

Once the Board of Directors approves this sale modality, the Recovery and Asset Realization Committee shall instruct the Financial Entities Management to prepare the public call, with the following content:

a) Identification of the immovable assets.

b) Description, current situation, and base price of the immovable assets to be disposed of.

c) Address, date, and time for the exhibition of the immovable assets, consultations, and holding of the envelope opening act.

d) Deadline for submission of proposals.

e) Schedule for the sale by public invitation.

f) Deadline for payment of the asset value in case of adjudication.

g) Date of communication of the invitation result.

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Article 26.- On the publication by public invitation.

The calls shall be published at least once in the Official Gazette of Calls and once in a newspaper of national circulation, with an advance of the last publication of at least ten (10) business days before the date set for the submission of proposals.

Article 27.- On the submission of proposals.

The Financial Entities Management shall be responsible for the receipt of envelopes at the place and date established in the call, for which effect it must keep a chronological record of the receipt of proposals, which must be closed upon conclusion of the term, in the presence of a Notary Public.

Article 28.- On the Proposal Opening Commission.

The Recovery and Asset Realization Committee shall designate three of its members to form a Commission in charge of carrying out all operational acts of this modality, including the public act of envelope opening in which a Notary Public will participate.

Article 29.- Qualification of Proposals.

The qualification of all proposals received in accordance with the respective public call shall be carried out by the Commission.

Article 30.- On the adjudication of the asset.

In a public act, the Commission shall proceed to adjudicate the asset to the interested party whose offer was the highest, provided that this offer is equal to or greater than the base price of the asset, which shall be notified to the adjudicated public entity.

Article 31.- Form of payment.

Once the immovable asset is adjudicated by the Commission, the Financial Entities Management shall make the respective charge and delivery of the immovable asset.

Payment by the adjudicated public entity must be made within 30 calendar days from the notification of the adjudication of the asset. In the event that such payment is not made within the term, the right of the adjudicatee shall be resolved, and the commission shall proceed to adjudicate the immovable asset to the second-best proposal.

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Article 32.- On the payment of the asset.

The payment of the asset shall be made through a bank transfer to the account designated by the Central Bank of Bolivia, within the established term.

Article 33.- On the transfer of the asset.

Once the payment is verified, the Financial Entities Management shall proceed with the delivery of the asset to the adjudicated entity, issuing the corresponding receipt.

Article 34.- On the declaration of unsuccessful sale by public invitation.

In the absence of bidders or if no offer meets the base price, the commission shall declare the call unsuccessful, and the Recovery and Asset Realization Committee for Liquidated Banks shall proceed with the disposition modality determined by the Board of Directors.

SECTION V

AUCTION BY OPEN BID

Article 35.- On the Auction by Open Bid.

The auction by open bid is the sale carried out by the Central Bank of Bolivia, of those immovable assets it has received from the Liquidated Banks, Sur S.A., Cochabamba S.A., and Banco Internacional de Desarrollo S.A., or those adjudicated judicially in judicial processes for the recovery of credit portfolios of said banks, sale that will be carried out through an auction open to natural or legal persons, private or public sector.

Article 36.- On the value of the assets.

The base price for the auction shall be determined in the same manner as established in Article 13 of this Regulation.

Article 37.- On the call for auction.

Once the Board of Directors approves the auction modality, the Recovery and Asset Realization Committee shall instruct the Financial Entities Management to prepare the public call, with the following content:

a) Identification of the immovable assets.

b) Description, current situation, and base price of the immovable assets to be disposed of.

c) Address, date, and time for the exhibition of the immovable assets, consultations, and holding of the auction.

d) Deadline for submission of proposals.

e) Schedule for the auction.

f) Deadline for payment of the asset value in case of adjudication.

g) Date of communication of the auction result.

Article 38.- On the publication for auction.

The calls shall be published at least once in the Official Gazette of Calls and once in a newspaper of national circulation, with an advance of the last publication of at least ten (10) business days before the date set for the submission of proposals.

Article 39.- On the submission of proposals.

The Financial Entities Management shall be responsible for the receipt of envelopes at the place and date established in the call, for which effect it must keep a chronological record of the receipt of proposals, which must be closed upon conclusion of the term, in the presence of a Notary Public.

Article 40.- On the Auction Commission.

The Recovery and Asset Realization Committee shall designate three of its members to form a Commission in charge of carrying out all operational acts of this modality, including the public act of the auction in which a Notary Public will participate.

Article 41.- Qualification of Proposals.

The qualification of all proposals received in accordance with the respective public call shall be carried out by the Commission.

Article 42.- On the adjudication of the asset.

In a public act, the Commission shall proceed to adjudicate the asset to the bidder whose offer was the highest, provided that this offer is equal to or greater than the base price of the asset, which shall be notified to the adjudicated entity.

Article 43.- Form of payment.

Once the immovable asset is adjudicated by the Commission, the Financial Entities Management shall make the respective charge and delivery of the immovable asset.

Payment by the adjudicated entity must be made within 30 calendar days from the notification of the adjudication of the asset. In the event that such payment is not made within the term, the right of the adjudicatee shall be resolved, and the commission shall proceed to adjudicate the immovable asset to the second-best proposal.

Article 44.- On the payment of the asset.

The payment of the asset shall be made through a bank transfer to the account designated by the Central Bank of Bolivia, within the established term.

Article 45.- On the transfer of the asset.

Once the payment is verified, the Financial Entities Management shall proceed with the delivery of the asset to the adjudicated entity, issuing the corresponding receipt.

Article 46.- On the declaration of unsuccessful auction.

In the absence of bidders or if no offer meets the base price, the commission shall declare the call unsuccessful, and the Recovery and Asset Realization Committee for Liquidated Banks shall proceed with the disposition modality determined by the Board of Directors.

CHAPTER VI

FINAL PROVISIONS

Article 47.- On the application of this Regulation.

This Regulation shall apply to all assets received by the Central Bank of Bolivia as payment in kind or through judicial adjudication from the Liquidated Banks, Sur S.A., Cochabamba S.A., and Banco Internacional de Desarrollo S.A., in accordance with Supreme Decree No. 2068.

Article 48.- On the interpretation of this Regulation.

In case of doubt regarding the interpretation of this Regulation, the Board of Directors of the Central Bank of Bolivia shall resolve it.

Article 49.- On the repeal of norms.

All norms that contradict this Regulation are hereby repealed.

Article 50.- On the entry into force of this Regulation.

This Regulation shall enter into force on the date of its approval.

La Paz, October 21, 2014

Marcelo Zabalaga Estrada

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Abraham Pérez Alandia
Alvaro Rodríguez Rojas
Reynaldo Yujra Segales
Ronald Polo Rivero