JPRF-F-2024-0130 — Amendment to the Technical Equity Resolution (Resolution No. JPRF-F-2024-0129, of November 29, 2024)

Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas Government Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | Resolution No. JPRF-F-2024-0130 THE FINANCIAL POLICY AND REGULATION BOARD CONSIDERING: That, Article 82 of the Constitution of the Republic of Ecuador recognizes the right to legal certainty, which is based on respect for the Supreme Norm and the existence of prior, clear, public legal norms applied by competent authorities; That, Article 84 of the Fundamental Charter prescribes that every body with normative power shall have the obligation to adapt, formally and materially, laws and other legal norms to the rights provided for in the Constitution; That, number 6 of Article 132 of the Supreme Norm grants public control and regulation bodies the authority to issue norms of a general nature in matters within their competence, without being able to alter or innovate legal provisions; That, the second paragraph of Article 141 of the Constitution determines that the “Executive Function is integrated by the Presidency and Vice Presidency of the Republic, the State Ministries and the other bodies and institutions necessary to fulfill, within the scope of their competence, the attributes of oversight, planning, execution and evaluation of national public policies and plans created to execute them.”; That, Article 226 of the Magna Carta establishes that State institutions, their bodies, dependencies, public servants and persons acting by virtue of a state power shall exercise only the competencies and faculties attributed to them in the Constitution and the law; That, Article 303 of the Fundamental Law provides that the “formulation of monetary, credit, exchange and financial policies is the exclusive faculty of the Executive Function (…)”; That, Article 308 ibidem precepts that financial activities are a service of public order, and may be exercised, with prior authorization of the State, in accordance with the law; That, Article 309 of the Supreme Norm stipulates that the national financial system is composed of the public, private, and popular and solidary sectors, which intermediates public resources, which will have specific and differentiated control norms and entities, which will be responsible for preserving their security, stability, transparency and solidity; That, Article 425 of the Constitution prescribes the hierarchical order of application of norms, which is the following: “The Constitution; international treaties and conventions; organic laws; ordinary laws; regional norms and district ordinances; decrees and regulations; ordinances; agreements and resolutions; and other acts and decisions of the public powers.”; That, Article 13 of the Organic Monetary and Financial Code, Book I, reformed by the Organic Law Reforming the Organic Monetary and Financial Code for the Defense of Dollarization, published in the Official Register No. 443 of May 3, 2021, created the Financial Policy and Regulation Board, part of the Executive Function and as a legal entity of public law, responsible for the formulation of credit, financial, securities, insurance, and prepaid comprehensive health care services policy and regulation; That, numbers 2 and 3 of Article 14 of the Code ibidem, precept that it corresponds to the Financial Policy and Regulation Board: “2. Issue the regulations that allow maintaining the integrity, solidity, sustainability and stability of the national financial, securities, insurance and prepaid comprehensive health care services systems in accordance with what is provided in article 309 of the Constitution of the Republic of Ecuador; 3. Issue micro-prudential regulations for the national financial, securities, insurance and prepaid comprehensive health care services sectors, based on proposals presented by the respective superintendencies, within their respective scopes of competence and without prejudice to their independence”;

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas Government Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | That, the third-to-last paragraph of the aforementioned Article 14 mandates the Financial Policy and Regulation Board to issue norms in matters within its competence, without being able to alter legal provisions; That, number 7 of Article 14.1 of the Code supra establishes that the Financial Policy and Regulation Board has the faculty to: “7. Issue the prudential regulatory framework to which financial, securities, insurance and prepaid comprehensive health care services entities must be subject, a framework that must be coherent, not give rise to regulatory arbitrage and cover, at least, the following: (…) b. Establish the interest rate system, as provided in article 130 of this Code, for the active and passive operations of the national financial system and other interest rates required by law, promoting the development of prudent credit: Minimum capital levels, technical equity, and risk weightings of assets, their composition, method of calculation and modifications; (…)”; That, number 27 of the aforementioned Article 14 provides that the Board “exercise the other functions, duties and faculties assigned to it by this Code and the law.”; That, the second paragraph of Article 190 of the aforementioned Organic Code states that “entities of the national financial sector, financial groups and popular and solidary groups, based on consolidated and/or combined financial statements, are obliged to maintain at all times, a relationship between their technical equity and the sum of their assets and contingencies weighted by risk, not less than nine percent (9%) (…)”; That, Article 422 of the Code ibidem determines that entities that form part of a financial group, individually and consolidated, shall be subject to all solvency, financial prudence and control norms determined in the Organic Monetary and Financial Code, Book I and by the Superintendency of Banks; That, Article 423 of the aforementioned Organic Code prescribes that, for the determination of the solvency of financial groups, the capital invested in their subsidiaries and affiliates shall be deducted from the total technical equity of the group head. It also orders the Board to establish the provisions that must be applied for the consolidation and/or combination of financial statements of financial groups, for the effects of the direct participation of the parent company or its significant influence in the constituent entities, as well as to establish the other deductions of the total technical equity of the parent, arising from accounting items related to their subsidiaries or affiliates or from identified risks not covered by them; That, the Twenty-Ninth General Provision of the Organic Monetary and Financial Code, Book I, added by the Organic Law Reforming the Organic Monetary and Financial Code for the Defense of Dollarization, provides that in the current legislation where mention is made of the “Monetary and Financial Policy and Regulation Board”, it shall be replaced by “Financial Policy and Regulation Board”; That, the Fifty-Fourth Transitional Provision of the Code supra precepts that “resolutions contained in the Codification of Monetary, Financial, Securities and Insurance Resolutions of the Monetary and Financial Policy and Regulation Board and norms issued by control bodies, shall remain in force until the Monetary Policy and Regulation Board and the Financial Policy and Regulation Board decide what corresponds, within the scope of their competencies.” That, by Resolution No. 047-2015-F of April 1, 2015, the Monetary and Financial Policy and Regulation Board replaced Chapter I “Relationship between Total Technical Equity and Assets and Contingencies Weighted by Risks for Institutions of the Public and Private Financial System”, Title V “On Technical Equity”, Book I “General Norms for the Application of Financial System Institutions” of the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board.

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas Government Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | That, by means of Resolution No. JPRF-F-2024-0129 of November 29, 2024, the Financial Policy and Regulation Board carried out reforms to Chapter VII “Relationship between Technical Equity and Assets and Contingencies Weighted by Risk for Entities of the Public and Private Financial System”, Title II “National Financial System”, Book I “Monetary and Financial System” of the Codification of Monetary, Financial, Securities and Insurance Resolutions; this resolution entered into force on the day of its issuance with the technical support of Technical Report No. JPRF-CTSF-2024-013 of November 27, 2024; That, the Technical Secretariat has detected involuntary errors within Resolution No. JPRF-F-2024-0129, which are documented in the Technical-Legal Report No. JPRF-CTCJ-2024-013 of December 4, 2024; and, to this effect, it concludes that “The Financial Policy and Regulation Board should proceed to clarify the lapsus calami of Resolution No. JPRF-2024-F-129 of November 29, 2024, which refer to numbers 6 and 7 of article 3 of Section II “Asset and Contingency Weighting Factors”, Chapter VIII “Relationship between Technical Equity and Assets and Contingencies Weighted by Risk for Entities of the Public and Private Financial System”, Title II “National Financial System”, Book I “Monetary and Financial System” of the Codification of Monetary, Financial, Securities and Insurance Resolutions, so that the aforementioned resolution is in line with Basel III technical standards, with the arguments exposed in Technical Report No. JPRF-CTSF-2024-013 of November 27, 2024, and in concordance with the other provisions contained in the same resolution, in order to guarantee legal certainty.”; That, the Technical Secretary of the Financial Policy and Regulation Board, through Memorandum No. JPRF-ST-2024-0105-M of December 4, 2024, submits to the President of the Board the Technical-Legal Report No. JPRF-CTCJ-2024-013 of December 4, 2024, and the corresponding draft resolution; That, the Financial Policy and Regulation Board, in an extraordinary session held by technological means, convened on December 4, 2024 and carried out via email on December 5, 2024, learned of Memorandum No. JPRF-ST-2024-0105-M of December 4, 2024, issued by the Technical Secretary of the Board; as well as the Technical-Legal Report No. JPRF-CTCJ-2024-013 of December 4, 2024, issued by the Technical Coordination of Financial System Policy and Regulation and by the Legal Coordination of Financial Policy and Norms, and the corresponding draft resolution; That, the Financial Policy and Regulation Board, in an extraordinary session held by technological means, convened on December 4, 2024 and carried out via email on December 5, 2024, learned of and approved the following Resolution; and, In exercise of its functions, RESOLVES: ARTICLE FIRST.- In Article First of Resolution No. JPRF-F-2024-0129 of November 29, 2024, an involuntary error was committed by substituting the entirety and not the pertinent part of number 6 of article 3 of Section II “Asset and Contingency Weighting Factors”, Chapter VIII “Relationship between Technical Equity and Assets and Contingencies Weighted by Risk for Entities of the Public and Private Financial System”, Title II “National Financial System”, Book I “Monetary and Financial System” of the Codification of Monetary, Financial, Securities and Insurance Resolutions, as it should have been. Therefore, the Article of the aforementioned Resolution shall be read as follows: “ARTICLE FIRST.- Substitute number 6 of Article 3 of Section II “Asset and Contingency Weighting Factors”, Chapter VIII “Relationship between Technical Equity and Assets and Contingencies Weighted by Risk for Entities of the Public and Private Financial System”, Title II “National Financial System”, Book I “Monetary and Financial System” of the Codification of Monetary, Financial, Securities and Insurance Resolutions, with the following text: “6. One point zero (1.0) for placements in loans or credit titles and other physical and financial assets and investments, considering the following accounts:

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas Government Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | 1202 Repo operations with financial entities (13) 13 Investments (6) 14 Credit Portfolio (7) 15 Debtors by acceptances 16 - 1619-1611 Accounts receivable less Accounts receivable for housing portfolio sold to securitization trust less Advance for acquisition of shares. 17 Realizable assets, adjudicated for payment, of commercial lease and not used by the institution 18 Properties and equipment 19 Other assets (8) 640105 Common guarantees 640205 Customs guarantees 640210 Guarantees National Financial Corporation 640220 Guarantees and retro-guarantees granted 640290 Others 640305 Letters of credit - Issued by the entity (3) 640310 Letters of credit - Issued on behalf of the entity (3) 6405 Future commitments (11) 6101 - 6408 Future purchases of foreign currency less future sales of foreign currency (9) 6103 - 6409 Rights in options less obligations in options 6104-6410 Rights by swap operations less obligations by swap operations 6105-6411 Other future operations less other future operations 640410 Approved credits not disbursed - Consumer credit portfolio (14) 6490 Other creditor contingent accounts”” ARTICLE SECOND.- In Article Second of Resolution No. JPRF-2024-F-0129 of November 29, 2024, an involuntary error was committed in the last paragraph of number 7 that is incorporated in Article 3 of Section II “Asset and Contingency Weighting Factors”, Chapter VIII “Relationship between Technical Equity and Assets and Contingencies Weighted by Risk for Entities of the Public and Private Financial System”, Title II “National Financial System”, Book I “Monetary and Financial System” of the Codification of Monetary, Financial, Securities and Insurance Resolutions, so it shall be read as follows: “ARTICLE SECOND.- Incorporate after number 6 of Article 3 of Section II “Asset and Contingency Weighting Factors”, Chapter VIII “Relationship between Technical Equity and Assets and Contingencies Weighted by Risk for Entities of the Public and Private Financial System”, Title II “National Financial System”, Book I “Monetary and Financial System” of the Codification of Monetary, Financial, Securities and Insurance Resolutions, number 7 which contains the following weighting: “7. Two point fifty (2.50) for the following groups:

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas Government Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | The balance of investments in local and foreign shares that are within the consolidation process. The capital assigned of agencies or branches abroad. The balances recorded in account 1611 “Advance for acquisition of Shares”, when they correspond to investments in shares, advances in capitalization or constitution of subsidiary or affiliate companies. The balance of investments in affiliates that does not exceed the established thresholds.”” SINGLE GENERAL PROVISION.- Resolution No. JPRF-F-2024-0129 is in force since November 29, 2024; however, it shall be read in the terms of this Resolution. FINAL PROVISION.- This Resolution shall enter into force from this date, without prejudice to its publication in the Official Register, and shall be published on the institutional website of the Financial Policy and Regulation Board within a maximum term of two days from its issuance. NOTIFY.- Given in the Metropolitan District of Quito, on December 05, 2024. THE PRESIDENT, Mgs. María Paulina Vela Zambrano The preceding Resolution was processed and signed by Magister María Paulina Vela Zambrano, President of the Financial Policy and Regulation Board, in the Metropolitan District of Quito, on December 05, 2024.- I CERTIFY. TECHNICAL SECRETARY, Mgs. Luis Alfredo Olivares Murillo