Regulatory Alerts2022-05-30
Agreement No. 005-2022 Modifying Article 6 of Agreement No. 6-2021 on Provisions for Modified Special Mention Credits
The Banking Superintendence of Panama issued Agreement No. 005-2022 to modify Article 6 of Agreement No. 6-2021, establishing an alternative accounting process for recognizing interest income on modified credits with significant risk increases. Banks are required to suspend interest recognition for income purposes and instead record such amounts in off-balance-sheet accounts, recognizing them only upon actual payment by the debtor. As an operational alternative, banks may recognize accrued interest as income if they simultaneously record a 100% provision, which is gradually reversed as payments are made.
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