Regulatory Alerts2022-01-11
Agreement No. 006-2021: Parameters and Guidelines for Determining Provisions for Modified Special Mention Credits
The Banking Superintendence of Panama issued Agreement No. 006-2021 to update provisioning parameters for Modified Special Mention credits, requiring banks to recognize significant increases in credit risk and establish provisions for expected credit losses in accordance with IFRS. The regulation prohibits the reversal of previously constituted provisions for the modified portfolio as of November 2021 and mandates the suspension of interest income recognition for impaired modified loans starting January 2022. Furthermore, it establishes supervisory review mechanisms for provisioning adequacy and outlines specific requirements for financial statement disclosures and interest capitalization options for restructured clients.
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