Ley N° 1488 de Bancos y Entidades Financieras, de 14 de abril de 1993 (Texto Ordenado por Decreto Supremo N° 26581 de 3 de abril de 2002) (Law of Banks and Financial Entities)

English translation of the Spanish text from bcb.gob.bo (the Spanish text is the official one). Retrieved 2026-10-26.

1 ORDERED TEXT OF LAW No. 1488 ON BANKS AND FINANCIAL ENTITIES (AS OF 5 MAY 2004)

PRELIMINARY TITLE

CHAPTER I DEFINITIONS ARTICLE 1.- For purposes of this Law, the following definitions shall be used, being indicative and not limitative:

Agency: Urban or provincial office that functionally depends on a branch or directly on the head office of a financial intermediation entity.

General Deposit Warehouse:

Subsidiary entity specialized in the storage, safekeeping and temporary preservation of goods or merchandise belonging to others; authorized to issue deposit certificates and pledge bonds (warrant) or guarantee.

Financial Leasing:

Commercial contract entered into by financial leasing companies engaged exclusively in such business, in their capacity as lessor, and a natural or legal person as lessee, by virtue of which the lessor transfers in favor of the lessee the right to use and enjoy a movable or immovable asset, through the payment of a fee in periodic installments, granting in favor of the lessee the option to purchase said assets, for the residual value of the total agreed amount. Financial leasing, due to its financial and credit nature, is of a legal nature distinct from that of the leasing regulated by the Civil Code.

Supervisory Authority:

Superintendency of Banks and Financial Entities.

Second-Tier Bank:

Authorized financial intermediation entity, whose sole purpose is the intermediation of resources, in favor of financial intermediation entities and financial associations or foundations.

Credit Information Bureau:

Corporation whose exclusive business is to provide credit information that allows for the adequate identification of the debtor, knowledge of their level of indebtedness and their level of risk.

Financial Conglomerate:

Set or group of entities under common control, whose activities are to carry out financial intermediation and, additionally, to provide services such as financial leasing, factoring, general deposit warehouses, insurance, pensions and securities.

Open Savings and Credit Cooperative:

Non-bank financial intermediation entity, constituted as a cooperative, authorized to carry out financial intermediation operations and to provide financial services to the public, within the framework of this Law, in the national territory.

Credit: It is any risk asset, whatever the modality of its instrument, through which the financial intermediation entity, assuming the risk of its recovery, provides or commits to provide funds or other assets or guarantees before third parties, the fulfillment of obligations contracted by its clients.

Financial Intermediation Entity or Legal person established in the country, authorized by the Superintendency of Banks and Financial Entities, whose corporate purpose is intermediation and the provision of

2 Financial Entity:

auxiliary financial services.

Banking Financial Intermediation Entity (Bank):

Authorized entity, of national or foreign origin, dedicated to carrying out financial intermediation operations and to providing financial services to the public within the framework of this Law, both in the national territory and abroad.

Non-Banking Financial Intermediation Entity:

Entity authorized to carry out financial intermediation, constituted as a Private Financial Fund, Open Savings and Credit Cooperative or Savings and Loan Mutual.

Parent Financial Entity:

Authorized entity that controls another financial intermediation entity called a subsidiary.

Factoring: Contract through which collectible debts of clients by bills of exchange are transferred to a Bank or its subsidiary, the latter assuming or not the credit risk.

Subsidiary: Company controlled by a parent financial entity.

Private Financial Fund (FFP):

Non-bank financial intermediation entity, constituted as a corporation, authorized to carry out financial intermediation operations and to provide financial services to the public, within the framework of this Law, in the national territory.

Financial Intermediation:

Activity carried out on a habitual basis, consisting of the receipt of deposits from the public, under any modality, for their placement in risk assets.

Savings and Loan Mutual:

Non-bank financial intermediation entity, constituted as a civil association, authorized to carry out financial intermediation operations and to provide financial services to the public, within the framework of this Law, in the national territory.

Subordinated Obligation:

Liability subordinated to all other liabilities of the financial intermediation entity, being available to absorb losses, in case the equity resources prove insufficient.

Head Office: Office that consolidates all operations of a financial intermediation entity.

Representation Office:

Business promotion office authorized by the Superintendency of Banks and Financial Entities, which represents a financial intermediation entity constituted and established abroad.

Repo: Contract through which ownership of securities is transferred, under the irrevocable and reciprocal commitment of the parties, to repurchase and resell said securities or others of the same kind, within a agreed term and price.

Branch: Office belonging to an authorized financial intermediation entity, subject to the administrative authority and organizational dependency of its head office.

Foreign Bank Branch:

Authorized office, belonging to a Bank constituted and established abroad, subject to the administrative authority and organizational dependency of its head office.

Overseas Branch:

Office, located abroad and supervised by the Superintendency of Banks and Financial Entities, subject to the administrative authority and dependency

3 organizational of its head office.

Superintendency: Superintendency of Banks and Financial Entities.

Note: Preliminary Title amended by Article 5 of Law No. 2297 of 20 December 2001.

TITLE ONE

CHAPTER I SCOPE OF THE LAW ARTICLE 2.- Financial intermediation activities and the provision of auxiliary financial services are subject to the scope of application of this Law, for the purpose of safeguarding national financial order and promoting a sound, reliable and competitive financial system.

The entities that carry out these activities are included within its scope of application.

This Law has preferential application over any other legal provision in all that it provides in its different titles.

The Central Bank of Bolivia shall be governed by its own provisions.

Note: Article amended by Article 6 of Law No. 2297 of 20 December 2001.

ARTICLE 3.- The following are financial intermediation activities and auxiliary services of the financial system:

1. Receiving money from natural or legal persons as deposits, loans or mutuals, or under another modality for its joint placement with the capital of the financial entity, in credits or in investments of its own line of business.

2. Issuing, discounting or negotiating securities and other documents representing obligations.

3. Providing deposit services in general deposit warehouses, if this activity is carried out by the subsidiary of a Bank.

Note: Item amended by Article 6 of Law No. 2297 of 20 December 2001.

4. Issuing traveler's checks and credit cards.

5. Operating and administering credit information bureaus, when this activity is carried out by a single-purpose corporation.

Note: Item amended by Article 6 of Law No. 2297 of 20 December 2001.

6. Carrying out trusts and financial intermediation mandates; administering third-party funds;

operating clearing houses and providing bank surety and guarantee.

7. Carrying out financial leasing and factoring operations.

Note: Item amended by Article 6 of Law No. 2297 of 20 December 2001.

8. Valuing the entities of the financial system.

The operations carried out within the framework of the activities mentioned in this article may be carried out through electronic means. These operations and the information contained and transmitted as electronic data messages shall have the same legal, judicial and validity

4 evidentiary effects as a written document with an autograph signature. The Superintendency shall issue the security regulations for electronic operations and transmissions carried out by financial intermediation entities.

Within the framework of the payment system, the Central Bank of Bolivia shall establish the regulatory framework for the digital signature to provide security and operability to electronic transfers.

Note: Final paragraphs incorporated by Article 6 of Law No. 2297 of 20 December 2001.

ARTICLE 4.- The financial intermediation activities and auxiliary financial services indicated in the previous article shall be carried out by the financial entities authorized by the Superintendency of Banks and Financial Entities, hereinafter referred to as the "Superintendency".

The Superintendency, with approval of the Committee of Financial Prudential Standards (CONFIP), shall incorporate into the field of application of this law other existing or to-be-created entities that habitually carry out financial intermediation activities or auxiliary financial services that are not covered by this law.

Note: Second paragraph amended by Article 67, section A2, item 1, of Law No. 1864 of 15 June 1998.

ARTICLE 5.- No person, natural or legal, may habitually carry out in the territory of the Republic activities proper to financial intermediation entities and auxiliary financial services described in this law, including the acts of commerce classified by items 4, 5, 8, 12 and 20 of Article 6 of the Commercial Code, without prior authorization of incorporation and operation granted by the Superintendency, with the formalities established in this law.

ARTICLE 6.- Non-bank financial intermediation entities and auxiliary financial services entities, defined in this law, whose purpose is the collection of resources from the public and whose incorporation and obtaining of legal personality are governed by their own laws or special legal provisions, shall apply said rules only with regard to their incorporation and organizational structure. The authorization of operation, oversight, control and inspection of their activities, administration and operations are the exclusive competence of the Superintendency, in accordance with the provisions of this Law.

Financial conglomerates shall be subject to regulation and supervision on a consolidated basis by the Superintendency, when a financial intermediation entity participates in the conglomerate, whatever the percentage of participation it has in the capital of the controlled companies.

The entities regulated by the Securities Market, Pensions and Insurance Laws that form part of a financial conglomerate shall operate with the limitations and prohibitions established in each of the aforementioned legal provisions.

For the purposes provided in the preceding paragraphs, the financial intermediation entity that participates in a financial conglomerate is obliged to register its composition and its name with the Superintendency.

The existence of a financial conglomerate is also established when:

a) The financial entities mentioned in the third and fourth paragraphs of this article have one or more common shareholders, partners or associates, whether individually or jointly, provided they represent at least five percent (5%) of the sum of the corporate capital of the companies that form the conglomerate.

b) When there is participation in the administration, management or any other form of common control.

Note: Article amended by article 6 of Law No. 2297 of 20 December 2001.

5 ARTICLE 7.- Any natural or legal person, national or foreign, domiciled or not in the country, that does not comply with the requirements and formalities relating to the organization and operation of financial intermediation entities and auxiliary financial services provided for in this Law is prohibited from making notices, publications and putting into circulation papers, writings or printed materials, whose terms induce the supposition that they have legal authorization to carry out the activities reserved by this Law to the aforementioned financial entities. Likewise, no natural or legal person may use in its corporate name, in Spanish or another language, terms that may induce the public to confuse it with legally authorized financial entities.

ARTICLE 8.- The Superintendency, on its own initiative or upon a public complaint filed with the Superintendency, after verification, shall require the person or entity that infringes this title to cease such activities. If the infringement persists, the Superintendency shall order, by administrative resolution, the closure of its premises, with the power to directly request the support of the public force, elevating the background to the Public Ministry for the prosecution of its representatives or legal representatives.

TITLE TWO BANKING FINANCIAL ENTITIES

CHAPTER I CONSTITUTION ARTICLE 9.- With the exception of the Central Bank of Bolivia, banking financial entities shall be constituted as corporations, and their deed of incorporation and bylaws must conform to the provisions of this Law and the Commercial Code as applicable. The shares of banking financial entities shall be registered and ordinary.

The name or corporate name of the banking financial entities referred to in the preceding paragraph must necessarily contain the word “Banco” in Spanish as the first word and another language. No other financial intermediation entity may use such denomination.

Note: Second paragraph incorporated by article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 10.- The following may not serve as founders of banking financial entities:

1. Those disqualified, by operation of law, from engaging in commerce.

2. Those who have an order of prosecution or a conviction for the commission of common crimes.

3. Debtors in default to the financial system who have credits in execution or written-off credits.

4. Those who have been declared, in accordance with legal procedures, guilty of economic crimes in public functions, against the financial order or in the administration of financial entities.

5. Those responsible for bankruptcies, through fault or fraud, in companies in general and entities of the financial system.

6. Those who have been disqualified from being holders of checking accounts.

7. National Representatives, Municipal Councilors and public servants in general.

8. The directors or administrators of State financial entities, including the Central Bank of Bolivia.

ARTICLE 11.- To obtain authorization of constitution, the founders, composed of natural and/or legal persons, may not be fewer than five (5).

6 The minimum requirements that must be submitted to the Superintendency are the following:

1. Economic-financial feasibility study.

2. Drafts of the deed of incorporation of the corporation and bylaws.

3. Certificate of personal background, for natural persons, issued by competent authority.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

4. Certificate of tax solvency and sworn statement of assets of the founders.

5. List of founders, indicating profession, nationality and other identification data, when they are natural persons and, in the case of national legal persons, public documents of incorporation, registration with the National Commerce Registry Service (SENAREC), annual report, audited balance sheet of the last fiscal year, list of its board of directors or equivalent governing body and list of shareholders down to the level of natural persons. In the event that the founding shareholders are legal persons constituted abroad, they must also comply with the provisions of articles 129, 165, 232 and 413 to 423 of the Commercial Code and present documents legalized and translated into Spanish if they are in another language, in accordance with current legal provisions. The Superintendency may exempt, in duly substantiated cases, the presentation of the list of shareholders.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

6. Individual share subscription contracts of the founders, for the amount of the constitution capital, with legal recognition of signatures and initials before competent authority.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

7. Bank deposit certificate as a guarantee of seriousness, to the order of the Superintendency, for an amount equivalent to ten percent (10%) of the minimum required capital. If within two hundred seventy (270) days, non-extendable, from the filing of the application, the incorporation and operation of the financial intermediation entity is not completed for reasons attributable to the founders, the Superintendency shall return the guarantee deposit and its interest less ten percent (10%) of the total capital and interest, an amount that shall be transferred to the General Treasury of the Nation.

Note: Item amended by Article 7 of Law No. 2297 of 20 December 2001.

8. Proposed list of administrators, indicating profession, background and experience in the financial system.

Note: Item amended by Article 7 of Law No. 2297 of 20 December 2001.

9. Individual authorization from the founders to be evaluated at any time and before any public or private authority or institution, national or foreign.

Note: Item incorporated by Article 7 of Law No. 2297 of 20 December 2001.

10. The form of presentation of the foregoing requirements shall be established by the Superintendency, by express regulation.

Note: Item incorporated by Article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 12.- Upon filing of the application in accordance with the preceding articles, the Superintendency shall publish it, at the expense of the founders, for three (3) consecutive days in a newspaper of national

7 circulation, so that within a period of fifteen (15) days, counted from the date of the last publication, any interested person may object to the organization of the new banking financial entity. The objections must be founded on concrete and reliable evidence and shall be brought to the knowledge of the founders, who within a period of fifteen (15) days must remedy them before the Superintendency.

ARTICLE 13.- When evaluating and qualifying the application for incorporation permit, the Superintendency shall take into account the project and the background of the founders, with respect to their solvency and suitability in financial activity. The Superintendency may approve or reject the application by reasoned resolution.

ARTICLE 14.- Once the requirements indicated in the preceding articles are satisfied, the Superintendency, within a term of sixty (60) days, shall grant the incorporation permit, authorizing the founders to carry out the pertinent legal actions. The founders shall publish the Resolution of incorporation permit in a newspaper of national circulation.

ARTICLE 15.- The incorporation permit shall be valid for one hundred eighty (180) days, within which the founders must comply with the following formalities:

1. Subscription and payment of one hundred percent (100%) of the minimum capital.

2. Deposit receipt for the paid-in capital in the Central Bank of Bolivia.

3. Presentation of the list and curriculum vitae of shareholders, directors and officers at the management level.

4. Notarization of the incorporation documents and bylaws before a Notary Public.

5. Registration in the Commercial Registry.

6. Presentation of operating manuals.

7. Designation of appropriate premises.

ARTICLE 16.- Once the total minimum capital has been subscribed and paid in cash, the premises for the operation of the banking financial entity have been enabled, and the board of directors and management staff have been formed, the Board of Directors shall notify the Superintendency of its decision to begin operations with the public.

The Superintendent shall order the inspections it deems pertinent. Upon conclusion of the inspections, the Superintendent of Banks shall postpone or grant the operating license, with the operating restrictions it deems prudent, setting a date for the start of its operations. The operating license shall be published for three (3) consecutive days in a newspaper of national circulation at the expense of the banking financial entity.

ARTICLE 17.- Banks incorporated abroad that apply for authorization for the installation of a Branch in the country must comply with the provisions of Articles 11 to 17 of this Law insofar as applicable. The Superintendency, in order to grant the operating license, shall require the presentation of the following documents:

1. Authorization conferred on the foreign Bank by the corresponding authority or by the supervisory body of the country of origin.

2. Legalized copy of its articles of incorporation and bylaws.

3. Minutes or resolution of the Board of Directors or of an equivalent decision-making body of the foreign Bank, expressly authorizing the opening and installation of the Branch in Bolivia.

4. Allocation and establishment in the country of the minimum capital required for a national Bank by deposit in the Central Bank of Bolivia.

8

5. Audited balance sheet and financial statements of the foreign Bank corresponding to the last fiscal period.

6. Compliance with the other requirements demanded of national Banks, insofar as applicable.

Foreign Banks operating in Bolivia through branches, after complying with the provisions of Book I, Title III, Chapter XII of the Commercial Code insofar as applicable, shall enjoy the same rights and privileges and shall be governed by the same laws, rules and regulations applicable to national Banks. No foreign Bank operating in Bolivia may, under any circumstances, invoke rights of foreign nationality with respect to its business and operations in the country.

Any controversy that arises shall be resolved, in law, by the Bolivian courts.

Applications from foreign Banks to operate in the country shall be conditioned upon the Superintendency verifying whether in the country of origin the conditions for granting a banking license meet at least those required in this Law.

Note: Last paragraph incorporated by Article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 18.- Second-tier financial entities shall use the name "Second-Tier Bank" and shall intermediate resources in favor of financial intermediation entities and associations or foundations of a financial nature. The minimum paid-in capital of a Second-Tier Bank shall be the equivalent of twice that established for a banking financial intermediation entity.

The form of incorporation, operations and activities of Second-Tier Banks shall be subject to Law No. 1488 of 14 April 1993 on Banks and Financial Entities and to the regulations approved by CONFIP.

Banking and non-banking financial intermediation entities and associations and foundations of a financial nature may make investments in shares of Second-Tier Banks in accordance with the limits established in Article 52 of Law No. 1488 of 14 April 1993 on Banks and Financial Entities and the regulatory provisions approved for that purpose by CONFIP. Second-Tier Banks may not invest in shares or participations of entities that participate in their capital. CONFIP shall regulate the aspects related to related-party loans in the case of Second-Tier Banks.

Note: Article amended by Article 7 of Law No. 2297 of 20 December 2001, which includes

Article 14 of Law No. 2196 of 4 May 2001.

ARTICLE 19.- Representation offices, with prior authorization from the Superintendency, may only carry out in the country activities for the promotion of financial services and business. These offices are prohibited from carrying out financial intermediation activities.

Note: Article amended by Article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 20.- Every branch, agency or representation office of foreign Banks operating in Bolivia shall have a legal representative with sufficient power.

CHAPTER II CAPITAL AND RESERVES ARTICLE 21.- The amount of the minimum paid-in capital of Banks, with the exception of the Central Bank of Bolivia, is set in national currency at an amount equivalent to two million (2,000,000.oo) special drawing rights (SDRs).

Note: Article 31(d) of Law No. 1670 of 31 October 1995 establishes: "Starting from the amounts established by law, in force up to the date of promulgation of this law, the BCB may increase but not decrease, the amounts of minimum capital of general compliance and establish the other characteristics of the minimum capital necessary for the creation and,

9 operation of entities of the financial intermediation system. The new minimum capital necessary for the creation and operation of Banks may not be greater than the average net worth of all these entities at the time of its determination.". The BCB, by Board Resolution No. 116/97 of 10 June 1997, establishes as minimum capital for Banks the equivalent of five million five hundred thousand special drawing rights (5,500,000 SDRs).

Starting from the amounts established by law, the Superintendency, with prior approval of CONFIP, may increase but not decrease, the amounts of minimum capital of general compliance necessary for the creation and operation of financial intermediation entities. The new minimum capital necessary for the creation and operation of financial intermediation entities, at the time of its determination, may not be greater than the average net worth of banking financial intermediation entities or of non-banking financial intermediation entities, according to their nature.

Note: Second paragraph incorporated by Article 7 of Law No. 2297 of 20 December 2001.

At no time shall the capital of a banking financial entity be less than the established legal minimum.

If a Bank is established with subscribed and unpaid capital greater than the minimum, the excess between both must be paid within a period of one year.

ARTICLE 22.- Capital contributions may only be made in cash.

Every new subscription of capital shares in a banking financial entity or financial services entity must be paid within a maximum period of one year, counted from the date of the share subscription agreement.

ARTICLE 23.- To reduce the capital of a banking financial entity, which may not be less than the legal minimum, authorization from the Superintendency shall be required.

An increase in capital of a banking financial intermediation entity, through the contribution of new or existing shareholders, capitalization of profits and equity reserves, must be reported to the Superintendency in order for it to issue the authorization for amendment of the articles of incorporation.

In the case of capital increases with contributions from new or existing shareholders, sworn statements from the contributors must be attached, identifying the origin of the resources and individual authorization to be evaluated at any time and before any public or private, national or foreign authority or institution.

Note: Second and third paragraphs amended by Article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 24.- Every transfer of shares of a financial intermediation entity must be communicated to the Superintendency for annotation in the respective registry. If through such transfer, a shareholder comes to possess, directly or indirectly, five percent (5%) or more of the capital of a banking financial intermediation entity, the communication must additionally be accompanied by the documentation established in numerals 3, 4, 5 and 9 of Article 11 of this Law, for the purpose of the evaluation provided in Article 13 of this Law, insofar as applicable.

Founding shareholders shall require authorization from the Superintendency to transfer their shares, directly or through the Stock Exchange, until three (3) years after the operating license has been granted to the financial intermediation entity.

Any transfer of shares that constitutes an infringement of the provisions of the preceding paragraphs is ineffective, in accordance with article 821 of the Commercial Code.

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001.

10 ARTICLE 25.- Branches of foreign banks operating in the country may not advertise in any manner the amount of the capital and reserves of their head office, but may do so with respect to the amount of capital and reserves allocated to the branch operating in the Republic of Bolivia.

ARTICLE 26.- Every banking financial entity must, in order to cover eventual losses, constitute a fund called Legal Reserve until it reaches fifty (50%) percent of its paid-in capital. To form said reserve, the Bank shall allocate at least ten (10%) percent of its annual net profits. Banking financial entities may form other reserve funds.

ARTICLE 27.- The ordinary shareholders' meeting or equivalent body of a financial intermediation entity, upon proposal of its board of directors, at the end of each annual fiscal year, may agree to the distribution of dividends or the reinvestment of profits from the annual net profits certified by external auditors, after deducting the corresponding legal reserve. Financial intermediation entities may not distribute anticipated or provisional dividends. Nor may dividends be distributed if, as a result of such distribution, they fail to comply with the legal ratios established in this Law.

The Superintendency, in the exercise of its functions, may prohibit the direct or indirect distribution of profits or surplus of financial intermediation entities when they have not recorded all their expenses, maintain deferred expenses, maintain pending recording of provisions for their loans or investments, or there are other items not adequately recognized in their financial statements.

Shareholders, partners, directors, managers or administrators of a financial intermediation entity who knowingly authorize the payment of dividends or surplus in contravention of the provisions of this law shall be individually and jointly liable for such payment and shall restore to the entity from their own funds the amount of such illegally distributed dividends.

For the purposes of verifying compliance with the provisions of this article, the Superintendency is authorized to require financial intermediation entities to submit information corresponding to the distribution of dividends.

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001.

CHAPTER III ADMINISTRATION ARTICLE 28.- The administration of banking financial entities shall be subject to the provisions of this Law, the Commercial Code, the legal provisions relating to the matter and their bylaws.

Directors, administration and oversight board members, statutory auditors, internal auditors, surveillance inspectors and administrators are civilly and criminally liable in accordance with the Law when, in the exercise of their functions and powers arising from the Law and its regulatory norms, through fraud or negligence they cause damage or harm to the financial intermediation entity, to shareholders or to third parties. The Superintendency is empowered to rule by express Administrative Resolution on the acts of directors, statutory auditors and administrators, based on the financial, administrative and operational situation of the entity.

The proceedings and reports of the Superintendency may be presented as evidence for the compensation of civil damages caused to the entity and to savers or depositors.

If there are indications of the commission of a crime, the Superintendency shall refer the case to the Public Ministry for investigation of the crime and shall promote criminal action in accordance with the provisions of

11 article 124 of the Political Constitution of the State. A copy of the background and reports of the Superintendency shall form part of the investigations conducted by the Public Ministry.

Note: Second, third and fourth paragraphs incorporated by article 7 of Law No. 2297 of 20 December 2001, ARTICLE 29.- Each ordinary share shall confer the right to one vote at shareholders' meetings.

Note: Article amended by article 67, section A2, numeral 2, of Law No. 1864 of 15 June 1998.

ARTICLE 30.- The number of members of the Board of Directors may not be less than five (5) nor more than ten (10).

ARTICLE 31.- Every election of director and statutory auditor carried out by an ordinary shareholders' meeting or the appointment of the manager, administrator or general attorney-in-fact made in accordance with the bylaws of the company must be notified to the Superintendency within ten (10) days of its occurrence. The exercise of such functions requires a bond qualified by the Superintendency. Directors and statutory auditors shall post a bond equivalent to twenty-four (24) months of the highest total salary paid, and managers, administrators and general attorneys-in-fact, the equivalent of twenty-four (24) months of their total salaries.

ARTICLE 32.- Persons who incur the prohibitions of article 10 of this Law, article 310 of the Commercial Code, except numeral 3, and likewise: may not be directors or statutory auditors of banking financial entities:

1. The Ministers and Deputy Ministers of the Executive Branch, the Directors and General Managers of state financial entities, the Superintendent and Intendant of Banks, up to one year after having ceased their functions.

2. The directors, statutory auditors or managers of other institutions of the national financial system, except with authorization from the Superintendency.

3. Spouses and persons related up to the second degree of consanguinity or affinity, according to civil computation. The Superintendency may grant a waiver to no more than two (2) persons so related on a board of directors.

ARTICLE 33.- No more than two persons related up to the second degree of consanguinity or affinity, according to civil computation and with approval of its Board of Directors and notice to the Superintendency, may be employees of banking financial entities.

The position of director or statutory auditor is incompatible with that of employee of the same banking financial entity.

ARTICLE 34.- The managers, deputy managers or general attorneys-in-fact of a financial intermediation entity, by having privileged information and being subject to banking secrecy, may not serve as director of another corporation, association or cooperative, except in subsidiary companies.

In cases where a financial intermediation entity is part of a financial conglomerate, its directors and administrators may be elected as members of the board of directors or statutory auditors of the entities that make up the conglomerate.

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001.

CHAPTER IV OPERATIONS

12 ARTICLE 35.- Banking financial entities are empowered to carry out passive, active, contingent and financial service operations, both in national currency and in foreign currency.

ARTICLE 36.- For purposes of this Law, the active operations of banking financial entities, in relation to term, shall be:

1. Short-term operations, not exceeding one (1) year.

2. Medium-term operations between one (1) year minimum and five (5) years maximum.

3. Long-term operations, exceeding five (5) years.

ARTICLE 37.- For purposes of this Law, the passive operations of banking financial entities, in relation to term, shall be:

1. At sight, any class of liabilities whose payment may be required at the simple request of the holder with the presentation of the respective document.

2. Time deposits, deposits of any denomination whose payment may be required within a term greater than or equal to thirty (30) days.

3. Savings bank deposits are money deposits with indefinite term, subject to the regulations of each Bank and which shall be approved by the Superintendency.

ARTICLE 38.- Banking financial entities are empowered to carry out the following passive operations:

1. Receive money deposits in savings accounts, checking accounts, at sight and time deposits.

2. Issue and place newly issued shares for capital increase.

3. Issue and place mortgage bonds in accordance with the provisions of article 40 of this Law.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

4. Issue and place bonds.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

5. Contract subordinated obligations.

6. Contract credits or obligations with the Central Bank of Bolivia, banking and financial entities of the country and abroad.

7. Accept bills of exchange drawn at term against themselves, whose maturities do not exceed one hundred eighty

(180) days counted from the date of acceptance and which originate from commerce operations, internal or external, of goods and/or services.

8. Issue traveler's checks and credit cards.

9. Enter into forward contracts for the purchase and sale of foreign currencies.

10. The other passive operations of a banking or financial nature, incorporated in article 3 of this Law and Title VII, Book III of the Commercial Code.

ARTICLE 39.- Banking financial entities are authorized to carry out the following active, contingent and service operations, with the limitations of this Law:

13

1. Grant credits and make short, medium and long-term loans, with personal, mortgage, pledge or combined guarantees.

2. Discount and/or negotiate securities or other documents of commerce obligations, whose maturity does not exceed one year.

3. Grant guarantees, sureties and other first-demand guarantees, the latter subject to regulations approved by CONFIP.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

4. Open, advise, confirm and negotiate letters of credit, at sight or at term.

5. Receive bills of exchange or other instruments for collection, as well as carry out collection, payment and transfer operations.

6. Make remittances and issue payment orders payable in the country or abroad.

7. Carry out exchange operations and purchase and sale of currencies.

8. Buy, hold and sell coins and bars of gold, silver and precious metals, as well as certificates of ownership of such metals.

9. Buy, hold and sell on own account, securities registered in the Securities Market Registry.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

10. Buy, hold and sell on own account, documents representing obligations listed on the stock exchange, issued by financial entities.

11. Buy and sell on own account commercial documents.

12. Act as intermediary on behalf of its clients in the subscription, placement and purchase-sale of securities, upon prior deposit of funds.

13. Rent safe deposit boxes.

14. Exercise trust commissions and fiduciary operations.

15. Acquire and sell real estate to be used by the banking entity in activities proper to its business.

16. Operate with credit cards and traveler's checks.

17. Act as originating agent in securitization processes, subject to regulation by the Superintendency.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

18. Serve as financial agent for investments or loans in the country, of resources originating from abroad.

19. Invest in the capital of securitization companies.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

14

20. Carry out repurchase and factoring operations.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

21. Invest in the capital of second-tier Banks, financial services companies, insurance companies and pension fund administrators.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

22. Syndicate with other Banks or non-bank financial intermediation entities to grant credits or guarantees, subject to regulation by the Superintendency, which shall not be considered an accidental partnership, nor entail joint and several liability among the syndicated entities.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

23. Maintain balances in correspondent Banks abroad.

24. Administer investment funds to make investments on behalf of third parties.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

25. Others authorized by the Superintendency of Banks and Financial Entities, with prior approval of CONFIP, that do not contravene the laws and legal provisions of the Republic.

Note: Item amended by article 67, section A2, item 3, of Law No. 1864 of 15 June 1998.

Banking financial entities may carry out the activities mentioned in items 9, 16 and 20 directly or through companies majority-owned by the Bank. The activities mentioned in items 12 and 24 must be carried out through companies majority-owned by the Bank, subject to regulation by the Superintendency.

Note: Last paragraph amended by article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 40.- Mortgage bonds may only be issued up to a maximum amount of ninety percent (90%) of the mortgage loans that qualify and appear, at all times, on the balance sheet of the financial intermediation entity issuing the bonds. Qualifying loans must necessarily have a real estate mortgage guarantee with first mortgage rank and without any other type of encumbrance.

Mortgage bonds are securities of serial issue with the modalities established by legal provisions.

Once acquired by the first holder, subsequent transfers of the mortgage bonds shall necessarily be made by contract contained in a public deed, unless their transmission occurs through their negotiation on the securities market. Any transfer made without complying with the provisions of the paragraph shall be null and void.

The Superintendency shall regulate the operational aspects of the issuance of mortgage bonds.

Note: Article incorporated by article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 41.- A banking financial entity may acquire full ownership of another similar one for its merger or absorption, with prior authorization from the Superintendency, in accordance with this Law and the Commercial Code.

15 ARTICLE 42.- Active and passive interest rates for operations of the financial intermediation system, as well as commissions and surcharges for other services, shall be freely agreed between the financial intermediation entities and the users. Financial intermediation entities may not unilaterally modify the terms, interest rates and conditions agreed in the contracts.

The effective annual interest rate includes all charges, surcharges or additional commissions for any concept or any other action that results in profit or income for the financial intermediation entity.

Financial intermediation entities shall calculate the effective annual interest rates, fixed or variable, using the formulas and procedures established by the Central Bank of Bolivia. The issuing entity shall determine the form and periodicity of the report of said information. This information shall be published weekly by the Central Bank of Bolivia, in the form determined by its Board of Directors. The Superintendency shall approve the mechanisms for disclosure of interest rates in the financial intermediation entities, in their advertising and in their contracts.

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001.

CHAPTER V LIMITATIONS AND PROHIBITIONS ARTICLE 43.- Banking financial entities may make investments abroad for the constitution of Banks, branches or agencies; such investments shall not exceed forty percent (40%) of their net worth.

ARTICLE 44.- A banking financial intermediation entity may not grant or maintain credits with a single borrower or borrower group that, as a whole, exceed twenty percent (20%) of the entity's net worth.

Contingent operations, counter-guaranteed at first demand by first-line foreign Banks, according to the Superintendency's registry, may reach the maximum limit of thirty percent (30%) of the entity's net worth.

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 45.- A financial entity may grant credits to a borrower or borrower group up to five percent (5%) of its net worth, unless the credits are duly guaranteed according to regulation.

The regulation to be issued by the CONFIP must determine those cases in which the total amount of credits may exceed the equity of the financial entity up to a maximum of two times.

In no case shall the risk of the financial entity exceed the net equity of the borrower.

Note: Second Paragraph amended by article 67, section A2, numeral 4, of Law No. 1864 of 15 June 1998.

ARTICLE 46.- For the purposes of this Law, net equity of financial intermediation entities shall be understood as the sum of primary and secondary capital, less the adjustments determined by the Superintendency and the external auditors. The capital adequacy ratio shall be calculated on the basis of net equity.

Note: Article incorporated by article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 47.- The rules issued by the Superintendency of Banks and Financial Entities in relation to the equity of financial entities must be based on the following provisions:

16

a) Financial entities must maintain net equity equivalent to at least ten percent (10%) of their total assets and contingents, weighted according to their risks.

b) The following asset and contingent weighting coefficients are established:

1. Of zero percent (0%) for cash in vault, deposits in the BCB and investments in securities issued by the BCB and the National Treasury, credits from Central Banks of other countries, pre-paid contingent credits and credits guaranteed by cash deposits constituted in the Bank itself.

2. Of ten percent (10%) for credits guaranteed by the National Treasury.

3. Of twenty percent (20%) for credits guaranteed by national Banks and foreign Banks qualified as first-line by an internationally prestigious company, as well as credits that the financial entity grants to said Banks and cash items in the process of collection.

4. Of fifty percent (50%) for those mortgage credits for housing, granted by financial intermediation entities to individual persons and destined exclusively to the acquisition, construction, remodeling or improvement of housing occupied or given in rent by the debtor owner, this last case being limited to a first or second housing owned by the debtor. This weighting shall not be applicable to loans granted to collective persons.

5. Of one hundred percent (100%) for all other assets, operations and services that, regardless of their legal form of instrumentation, entail a risk or any kind of financial commitment for the financial entity.

These coefficients shall apply as of 1 July 1998. In the meantime, the current regulation that complies with article 47 of the Law of Banks and Financial Entities No. 1488 of 14 April 1993 shall apply.

c) Operations that generate assets not contemplated in the preceding paragraph shall have weighting coefficients determined by absolute majority of the CONFIP.

d) The amounts resulting from mismatches between assets and liabilities of financial intermediation entities, by concept of terms and interest rates, as well as investments in securities subject to market risks, shall be calculated by the financial intermediation entities. The regulations shall be approved by the Committee of Financial Prudence Standards (CONFIP).

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001, which includes the text of article 33 of Law No. 1670 of 31 October 1995 and article 67 section A3, numeral 4 of Law No. 1864 of 15 June 1998, with modification of numeral 4 of subsection b)

and inclusion of a new subsection d).

ARTICLE 48.- Primary capital is constituted by: (i) paid-in capital; (ii) legal reserves; (iii)

irrevocable contributions pending capitalization and (iv) other non-distributable reserves.

Secondary capital is constituted by: (i) subordinated obligations with maturity term greater than five (5) years and only up to fifty percent (50%) of primary capital and (ii) voluntary generic provisions to cover future losses not yet identified up to two percent (2%) of their assets.

In no case may total secondary capital exceed one hundred percent (100%) of primary capital.

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001.

17 ARTICLE 49.- The generic provisions made by financial intermediation entities, voluntarily and in addition to those determined by this law, its regulations and the rules of the Superintendency, within the limit established in article 48 above, shall be exempt from the payment of taxes, fees and other tax contributions, in the form and conditions regulated by the Executive Power.

Note: Article incorporated by article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 50.- With relation to credit operations, the following must be complied with:

a) Financial entities may not grant credits to borrowers or borrower groups linked to them.

b) Any borrower or borrower group that meets one or more of the following characteristics shall be considered linked to a financial entity:

1. Holds a participation greater than ten percent (10%) in the capital of the financial entity, directly, or indirectly through third natural or legal persons.

2. Performs in the financial entity directive, executive, internal control functions, or provides permanent advice to the higher instances of its administration. Any legal person with profit purposes in which the same participate shall also be considered a linked borrower.

3. Being a legal entity incorporated in Bolivia or abroad, the financial entity does not have updated information and identification of its owners. Companies whose shares or those of their owners are regularly traded on a stock exchange are excepted.

4. It does not demonstrate a sufficient commercial or productive purpose to justify the financing received, nor sufficient net worth or net resource flow to support it.

c) Credits granted to natural and/or legal persons that maintain among themselves some relationship of ownership, administration, guarantees, activity or destination of the credit, when such relationship determines that such credits represent the same credit risk, shall be considered credits granted to a borrower group.

d) Also considered as a borrower group, whether linked or not, shall be that which is qualified as such by the Superintendency of Banks and Financial Entities, based on reasonable and sufficient indications that lead it to presume "juris tantum" the existence of binding relationships between natural and legal persons of a nature similar to those indicated in the preceding subparagraphs.

Note: Article incorporated by article 7 of Law No. 2297 of 20 December 2001, ARTICLE 51.- Banking financial entities may only invest in shares of insurance corporations, financial services, credit information bureaus and clearing houses;

securitization companies and pension fund administrators; and second-tier Banks, which in turn may not invest in shares of the banking financial intermediation entity that made the investment. These investments shall be consolidated in the investing entity for solvency calculation.

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 52.- The total amount of investments made by a banking financial intermediation entity in fixed assets, in its agencies or branches and in shares of insurance companies, financial services, securitization companies, pension fund administrators and second-tier Banks shall not exceed the net worth of the banking financial intermediation entity.

Additionally, the banking financial intermediation entity may make contributions or donations

18 for social, cultural and guild purposes, with the limitations determined by regulation issued by the Superintendency.

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 53.- A banking financial entity may receive credits from other financial entities, up to one (1) time its net worth. This limit may be extended up to two (2) times the entity's net worth, under express authorization of the Superintendency.

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 54.- Banking financial entities may not:

1. Carry out operations with guarantee of their own shares.

2. Grant credits for the purpose that their proceeds be used, by any means, for the acquisition of shares of the Bank itself.

3. Item repealed by article 32, item 1, of Law No. 2297 of 20 December 2001.

4. Carry out credit operations with their administrators and/or with borrowers or borrower groups linked to them; except with their non-executive employees, in which case the total of such operations may not exceed one and a half percent (1.5%) of the net worth of the banking financial entity, nor individually ten percent (10%) of said limit.

5. Give bonds or guarantees or in any other way back monetary or mutual obligations between third parties.

6. Give their assets as collateral, directly or indirectly, under any modality provided by Law. This limitation does not extend to guarantees granted for liquidity credits of the Central Bank of Bolivia, in accordance with regulations of the issuing entity.

Note: Item amended by article 7 of Law No. 2297 of 20 December 2001.

7. Be partners or shareholders of non-financial companies.

The transfer of real estate for use and credit portfolio shall be subject to regulations of the Superintendency, approved by CONFIP.

Note: Last paragraph incorporated by article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 55.- A financial intermediation entity may not hire external auditors, appraisal experts, risk evaluators who are spouses or relatives of its directors or managers, up to the fourth degree of consanguinity and second degree of affinity, according to civil computation.

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001.

ARTICLE 56.- In no case may a banking financial entity, in correspondent functions, carry out operations proper to a bank branch.

ARTICLE 57.- Movable or immovable property that becomes the property of a financial intermediation entity as a consequence of judicial or extrajudicial actions it exercises to obtain the recovery of its credits must be sold within a period of one (1) year from the date of adjudication. At the date of adjudication of the property, the financial entity must provision at least twenty-five percent (25%) of the book value of said property.

If the respective sales are not made within the mentioned period, the financial intermediation entity must make the following provisions:

19

a) At least fifty percent (50%) of the book value of said property, once the period of one (1) year from the date of adjudication has ended.

b) One hundred percent (100%) of the book value of said property before the end of the second year from the date of adjudication.

Financial intermediation entities may not incorporate adjudicated assets as assets for use, without authorization from the Superintendency.

When the financial intermediation entity receives in payment ordinary or preferred newly issued shares representing the capital of a debtor company, restructured under the Voluntary Restructuring Law, they may not represent more than one third of the equity of the restructured company; these shares may be held in ownership by the creditor financial institution for the maximum term established for the payment of the debt in the transaction agreement. If after this period the financial intermediation entity continues in possession of the shares, it shall obligatorily make a provision equivalent to one hundred percent of the amount recorded in its books.

For financing purposes, the new credit operations arising from the transaction agreement shall not be considered as related-party credits.

The shares received in payment, arising from the transaction agreement signed under the Voluntary Restructuring Law, shall be considered as risk assets for the purposes of calculating credit limits.

Note: Article amended by article 7 of Law No. 2297 of 20 December 2001.

Article amended by article 26 of Law No. 2495 of 4 August 2003.

TITLE THREE FINANCIAL AUXILIARY SERVICE COMPANIES

CHAPTER I SCOPE OF APPLICATION ARTICLE 58.- Financial leasing, factoring, clearing house and credit information bureau companies are subject to the scope of application of this Law, as well as general deposit warehouses subsidiary to Banks.

The Superintendency shall be responsible for granting the operating license of these companies.

The members of the board of directors, shareholders, managers and employees shall be subject to the same requirements established for Banks.

The dissolution and liquidation processes of financial auxiliary service companies, whether or not linked to banking financial intermediation entities, shall be governed by the provisions of the Commercial Code, Law No. 1834 of the Securities Market and Chapter V of Title Nine of this law, insofar as applicable.

Note: Article amended by article 8 of Law No. 2297 of 20 December 2001.

CHAPTER II FINANCIAL LEASING ARTICLE 59.- Financial leasing companies shall be incorporated in the form of corporations, with a minimum share capital of five percent (5%) of the capital required of Banks and an exclusive corporate purpose dedicated to carrying out the operations mentioned in this chapter.

20 Financial leasing companies shall maintain, in addition to the legal reserve to which they are obligated by their status as a corporation, a non-distributable reserve for application to eventual losses, equivalent to two percent (2%) of the portfolio.

Financial leasing companies shall be subject to the rules established in this Law for banking financial intermediation entities, with respect to related-party operations and risk concentration.

Note: Article amended by article 8 of Law No. 2297 of 20 December 2001.

ARTICLE 60.- Financial leasing companies have an exclusive purpose and may not carry out any other financial or financial intermediation activity. On a complementary basis, they may carry out the following activities:

a) Maintain and preserve the leased assets.

b) Assign to another financial leasing company or to securitization companies the contracts they have entered into.

c) Sell or lease assets that have been the object of financial leasing operations.

d) Acquire, rent and sell movable and immovable assets used in activities proper to the business.

e) Pledge the cash flows from the financial leasing contracts entered into with resources from the financing that is guaranteed.

Note: Article amended by article 8 of Law No. 2297 of 20 December 2001.

ARTICLE 61.- Financial leasing companies for their financing may:

a) Issue securities through public offering.

b) Obtain financing from national and foreign financial intermediation entities.

c) Obtain financing from suppliers provided it is directly associated with the purchase of assets that are the object of a financial leasing contract.

Financial leasing companies may not:

1. Grant guarantees, sureties, letters of guarantee, letters of credit or any other guarantee.

2. Invest in the share capital of another company.

3. Receive money deposits under any modality.

4. Carry out real estate financial leasing operations with financial intermediation entities.

5. Assign or pledge to financial intermediation entities the financial leasing contracts they have entered into.

Note: Article amended by article 8 of Law No. 2297 of 20 December 2001.

ARTICLE 62.- The conditions of the financial leasing contract and its instrumentation, the use of the assets granted in financial leasing, the tax regime and the specific depreciation regime of the assets subject to financial leasing shall be regulated by supreme decree.

21 When the lessor demands the restitution of the assets object of the financial leasing through judicial channels for any cause of termination provided in the contract, the judge shall order, upon the mere presentation of the duly acknowledged financial leasing contract or the public deed thereof, the seizure of the assets object of said contract, excepting immovable assets. In the case of real property, the rules and procedure in force for that purpose shall apply as relevant, and the lessee shall be obligated to pay the lease payments stipulated in the contract plus legal interest until the time of restitution of said real property.

The assets subject to a financial lease may not be assigned as collateral nor be subject to any precautionary measure during the term of the financial lease contract, provided that the lessee is complying with the terms of said contract.

Note: Article amended by Article 8 of Law No. 2297 of 20 December 2001.

CHAPTER III FACTORING ARTICLE 63.- Factoring companies may carry out the following operations in accordance with the rules of Section V, Chapter VIII, Title II, Book II of the Commercial Code:

1. Acquisition of trade bills for goods and services, whose maturity is short-term.

2. Acquisition of trade bills for goods and services provided on short-, medium-, or long-term credit, provided that they are not due or in arrears.

3. Purchase of trade bills without right of return.

4. Purchase of trade bills with right of return and restitution and/or compensation by other or other valid trade bills.

CHAPTER IV GENERAL DEPOSIT WAREHOUSES ARTICLE 64.- General deposit warehouses, patrimonially linked to a banking financial intermediation entity, shall be governed by this Law and the Commercial Code, and may carry out the following operations and services.

Note: Paragraph amended by Article 8 of Law No. 2297 of 20 December 2001.

1. Storage, preservation, and custody of any merchandise or product owned by third parties, in own or leased warehouses, in accordance with the Commercial Code.

2. Operate customs premises, subject to compliance with the requirements of Law.

3. Issue deposit certificates in accordance with the Commercial Code and pledge bonds.

Note: Item amended by Article 8 of Law No. 2297 of 20 December 2001.

4. Issue bonds or obligations with specific guarantees.

5. Pack, sack, or divide and carry out any other activities aimed at the preservation of the merchandise and products deposited, at the request of the depositor and with the consent of the pledge creditor.

6. Purchase real property intended for its corporate purpose.

22

7. Obtain financing for the purchase, improvement, or expansion of its facilities.

ARTICLE 65.- General deposit warehouses may not carry out the following operations:

1. Issue deposit certificates for merchandise that has been previously judicially attached.

2. Pledge its assets in matters other than its corporate purpose.

3. Acquire the assets received in pledge.

4. Grant credits under any modality.

5. Engage in the commercialization of merchandise and products.

6. Carry out financial intermediation operations.

ARTICLE 66.- The minimum paid-in capital of general deposit warehouses shall be equal to ten percent (10%) of the minimum capital required of Banks.

ARTICLE 67.- The Superintendency shall be responsible for the regulation of the establishment of the deposit in general warehouses referred to in Article 1204 of the Commercial Code.

CHAPTER V CLEARING HOUSES AND CREDIT INFORMATION BUREAUS ARTICLE 68.- The rules for the creation, constitution, and operation of clearing houses shall be established by the Central Bank of Bolivia.

The rules for the creation, constitution, and operation of credit information bureaus shall be approved by CONFIP.

Note: Article amended by Article 8 of Law No. 2297 of 20 December 2001.

TITLE IV NON-BANKING FINANCIAL INTERMEDIATION ENTITIES ARTICLE 69.- For the purposes of this law, non-banking financial intermediation entities are open savings and credit cooperatives, savings and loan mutuals, and private financial funds, which shall be governed in accordance with Article 6 of this Law. No other entity may use these denominations. No non-banking financial intermediation entity other than the types mentioned may be constituted.

In all matters not expressly provided for in this title, the provisions contained in this Law for banking financial intermediation entities and other related rules shall apply as relevant.

Note: Article amended by Article 9 of Law No. 2297 of 20 December 2001.

CHAPTER I SAVINGS AND LOAN COOPERATIVES ARTICLE 70.- Open savings and credit cooperatives shall be constituted as specialized or single-purpose entities for financial intermediation, adopting the regime of

23 limited liability. They are obligated to use in their denomination the word “Limitada” or the abbreviation “Ltda.”. To obtain its legal personality, the requesting entity must previously have the favorable opinion of the Superintendency.

Savings and credit cooperatives that only carry out financial, savings, and credit operations exclusively among their members and do not have an operating license from the Superintendency are excluded from this Law, and must use in their denomination the word “Laboral” or “Comunal”, as the case may be. Their operations, organization, operation, and administration shall be regulated by the Executive Branch.

An open savings and credit cooperative may convert into a closed savings and credit cooperative, with prior authorization from the Superintendency, which shall establish the requirements and conditions of said process, in order to safeguard the public interest.

Note: Article amended by Article 9 of Law No. 2297 of 20 December 2001.

ARTICLE 71.- Open savings and credit cooperatives may carry out passive and active operations nationwide, except numerals 3, 4, 7 and 8 of article 3 and numerals 8 and 9 of article

38 above. Said exception covers numerals 4 and 6 only with regard to operations with foreign countries, numerals 16, 19, 20, 21 and 24 of article 39 of this Law. The taking of money in current accounts shall be authorized, in each case, by the Superintendency.

Active financial intermediation operations may only be carried out with their members; passive operations shall be carried out with their members, the public and with financial entities, national or foreign.

Note: Article amended by article 9 of Law No. 2297 of 20 December 2001.

ARTICLE 72.- The primary capital of open savings and loan cooperatives may not be less than the equivalent in national currency of one hundred thousand (100,000) special drawing rights (SDRs) and shall consist of: (i) contributions from cooperative members, represented by contribution certificates; (ii) reserve fund constituted by the surplus of perception shown in the balance sheet; and (iii)

donations received for free disposal.

Note: Article amended by article 9 of Law No. 2297 of 20 December 2001.

ARTICLE 73.- Open savings and credit cooperatives may not redeem contribution certificates, nor distribute dividends or surpluses if there are accumulated losses, deficiencies in the constitution of provisions and reserves or if with said distribution, the technical and legal limits established in this Law are breached.

The members of the boards and executives who authorize the distribution of surpluses contrary to the provisions of this article shall be personally and jointly liable, and must restore to the cooperative, with their own assets, the amount of the illegally distributed surpluses.

Note: Article amended by article 9 of Law No. 2297 of 20 December 2001.

CHAPTER II SAVINGS AND LOAN MUTUALS Note: Chapter title amended by article 9 of Law No. 2297 of 20 December 2001.

ARTICLE 74.- Savings and loan mutuals are private non-profit entities that intermediate financial resources under the characteristics and limitations established in this Law.

24 Savings and loan mutuals may carry out passive and active operations nationwide, except numerals 8 with regard to traveler's checks and 9 of article 38 and numerals 4 and 6 with regard to transfers and payment orders abroad, 16 with regard to traveler's checks, 19, 20, 21 and 24 of article 39 of this law. They also may not carry out the operations provided in numerals 3, 4 only with regard to traveler's checks, 7 and 8 of article 3 of this Law. The taking of money in current accounts and the issuance of credit cards shall be authorized, in each case, by the Superintendency.

Note: Article amended by article 9 of Law No. 2297 of 20 December 2001.

ARTICLE 75.- The primary capital of savings and loan mutuals has an institutional character and may not be less than the equivalent in national currency of three hundred thousand (300,000) special drawing rights (SDRs) and shall consist of: (i) the reserve fund constituted by the surplus of perception shown in the balance sheet; (ii) donations received for free disposal; and (iii) contributions received up to the date of enactment of this Law.

Savings and loan mutuals may change their legal nature, complying with the conditions and characteristics established by Law. In case of liquidation, the rules of the Civil Code for the liquidation of non-profit civil associations shall be followed.

Note: Article amended by article 9 of Law No. 2297 of 20 December 2001,

CHAPTER III PRIVATE FINANCIAL FUNDS Note: Chapter title amended by article 9 of Law No. 2297 of 20 December 2001.

ARTICLE 76.- Private financial funds are corporations whose main purpose is the channeling of resources to small and micro borrowers whose activities are located in both urban and rural areas.

Private financial funds may carry out passive and active operations nationwide, except numerals 3 and 7 with regard to factoring, of article 3. Said exception covers numerals 5 and 6 of article 39 of this Law, only with regard to foreign trade operations, with operations for sending and receiving remittances of money from legal and natural persons within and outside the country being permitted. Also excepted are numerals 19, 21 only with regard to insurance companies and 24 of article 39 of this Law. The taking of money in current accounts and the issuance of credit cards, as well as the investment of the capital of financial services entities shall be authorized, in each case, by the Superintendency.

Note: Article amended by article 9 of Law No. 2297 of 20 December 2001.

ARTICLE 77.- The primary capital of private financial funds is constituted in accordance with

article 48 of this Law, it may not be less than the equivalent in national currency of six hundred thirty thousand (630,000) special drawing rights (SDRs).

Note: Article amended by article 9 of Law No. 2297 of 20 December 2001.

CHAPTER IV LIMITATIONS AND PROHIBITIONS Note: Chapter incorporated by article 9 of Law No. 2297 of 20 December 2001

25 ARTICLE 78.- Non-bank financial intermediation entities may make contributions or donations for social, cultural and trade association purposes, with the limitations determined by regulation issued by the Superintendency.

Note: Article amended by article 9 of Law No. 2297 of 20 December 2001.

ARTICLE 79.- Non-bank financial intermediation entities may not carry out the following operations:

a) Receive as collateral for loans, in whole or in part, shares, contribution certificates or similar securities of the entity itself.

b) Require membership fees other than contribution certificates in order to grant associate status, in the case of open savings and credit cooperatives.

c) Grant loans to directors, members of the boards of administration and oversight or boards of directors, as applicable, and to the members of their credit committees, during the time their mandate lasts. Loans that are outstanding at the time they are elected shall maintain the conditions originally agreed, and may not be subject to rescheduling.

d) Grant or maintain loans with its executives, officials or groups of borrowers linked to them, within the scope of article 50 of this Law. For purposes of this Law, executives and officials shall be understood as those who exercise decision-making or operational functions, whether or not they are attorneys-in-fact, or who provide services to the entity under any denomination, who may commit the entity, without limitation or with particular limitations to sole signature. The loans held by such persons must be fully paid before assuming duties.

e) Grant loans to a borrower or borrower group for an amount greater than one percent (1%) of its net equity, if they have personal guarantee.

f) Grant or maintain loans with a borrower or borrower group for more than three percent (3%)

of its net equity. Housing loans intended for a borrower or group of borrowers are excepted, which may not exceed five percent (5%) of the net equity in the financial intermediation entity. This last limit may reach ten percent (1O%), with prior express authorization from the Superintendency of Banks and Financial Entities.

g) Grant loans to an entity of the financial system for more than twenty percent (20%) of its net equity, except in cases expressly authorized by the Superintendency in places where there are not sufficient financial entities.

h) Transfer real estate for use and loan portfolio, subject to regulation by the Superintendency, approved by the Committee of Financial Prudential Standards (CONFIP).

Note: Article amended by article 9 of Law No. 2297 of 20 December 2001.

ARTICLE 80.- The Central Bank of Bolivia may grant liquidity loans to non-bank financial intermediation entities, with guarantee of the Liquid Asset Requirement Fund (RAL), in accordance with regulations approved by its Board of Directors.

Note: Article amended by article 9 of Law No. 2297 of 20 December 2001, ARTICLE 81.- The regularization and intervention of non-bank financial intermediation entities are subject to the provisions of Title Nine of this Law.

Note: Article amended by article 9 of Law No. 2297 of 20 December 2001.

TITLE FIVE

26

CHAPTER I LEGAL RESERVE ARTICLE 82.- Note: Article repealed by article 90, numeral 2 of Law No. 1670 of 31 October 1995.

ARTICLE 83.- Note: Article repealed by article 90, numeral 2 of Law No. 1670 of 31 October 1995.

ARTICLE 84.- If any financial intermediation entity fails to constitute the required legal reserve, the Superintendent shall impose a fine of two percent (2%) of the average deficiency, incurred in the two-week period, or a percentage equivalent to double the average of its active rate of the thirty (30) days preceding the start of the deficiency, divided by twenty-six (26); whichever is greater. If the deficiency continues, double the fine established above shall be imposed, for each successive two-week period.

The Superintendency may suspend the application of fines for reserve deficiency due to force majeure verified by it.

ARTICLE 85.- The legal reserve constituted and non-equity deposits made in the Central Bank of Bolivia shall not be subject to any type of judicial embargoes or retentions, arising from litigation between natural or legal persons.

The Central Bank of Bolivia may debit from the legal reserve the liquidity loans not paid at maturity.

Additional reserves, established by the issuing entity, may be constituted in fixed-income exchange-traded financial instruments, rated and accepted by the Central Bank of Bolivia.

TITLE SIX

CHAPTER I BANKING SECRECY ARTICLE 86.- Operations carried out by financial intermediation entities shall be subject to banking secrecy. Information related to such operations may not be provided except to their holder, to whom the holder authorizes or to the person who legally represents the holder, except as established in

article 87 of this Law.

Note: Article amended by article 25, numeral 3 of Law No. 2064 of 3 April 2000.

ARTICLE 87.- Banking secrecy shall be lifted only:

1. By means of a reasoned judicial order, issued by a competent judge or at the express reasoned request of the prosecutor, within a formal process and expressly, through the Superintendency.

Note: Numeral amended by article 10 of Law No. 2297 of 20 December 2001.

2. To issue the reports ordered by the judges to the Superintendency in judicial process and in compliance with the functions assigned to it by Law.

3. To issue the reports requested by the tax administration about a specific responsible person, within an ongoing tax verification. Such reports shall be processed through the Superintendency.

27 Note: Numeral amended by article 10 of Law No. 2297 of 20 December 2001.

4. Within the information exchanged between banking and financial entities among themselves, in accordance with reciprocity and banking practices.

5. To issue the general reports required by the Central Bank of Bolivia.

ARTICLE 88.- The directors, statutory auditors and their alternates, and managers of the following are obligated to keep secret the affairs and operations of the financial system and its clients that come to their knowledge in the exercise of their functions:

1. Financial intermediation entities.

2. Central Bank of Bolivia.

3. External audit firms.

4. Risk rating firms.

5. Affiliated companies of financial entities.

6. Public officials related to the financial intermediation activity.

Note:. Numeral incorporated by article 10 of Law No. 2297 of 20 December 2001.

ARTICLE 89.- The Superintendent and the employees of the Superintendency, even after ceasing their functions, are prohibited from disclosing information related to the documents, reports or operations of financial institutions or of persons related to the financial system. The official or employee who infringes this prohibition shall be removed from office, without prejudice to the corresponding civil or criminal liabilities.

ARTICLE 90.- The Superintendency shall provide the following information:

1. The list of checking accounts closed for issuing checks without sufficient funds.

2. The list of debtors in execution of the financial system.

3. Non-personalized statistical information on financial entities.

4. Partial information from the Risk Information Center to private entities exclusively engaged in microcredit and consumer credit, subject to regulations issued by the Superintendency of Banks and Financial Entities.

Note: Numeral incorporated by article 25, numeral 4 of Law No. 2064 of 3 April 2000.

TITLE SEVEN

CHAPTER I ILLEGAL FINANCIAL ACTIVITY ARTICLE 91.- No natural or legal person may habitually carry out operations proper to financial intermediation entities without prior authorization from the Superintendency. Those operations carried out in contravention of the provisions of this article shall be null and void by operation of law, without this implying the elimination of the civil and criminal liabilities of those who carried out these operations.

28 In cases of criminal proceedings, the documentation, reports and opinions of the supervisory, regulatory and control bodies and institutions of foreign States or International Organizations officially sent to the Superintendency may be incorporated into the investigations in charge of the Public Ministry and into the process as documentary evidence.

The Superintendency, without incurring a violation of banking secrecy, upon request and without the need for reciprocity, may exchange information related to the legitimization of illicit gains with other analogous international institutions or bodies, as well as with foreign or international law enforcement institutions and judicial authorities. The information requested by the Superintendency from foreign bodies or institutions, for the purposes of investigating illegal financial activities, legitimization of illicit gains or infractions of the supervision, regulation and control rules, within the territory, shall not require any judicial or administrative formality for its presentation to the judicial authorities.

The Superintendency, by itself or through the Financial Investigations Unit (UIF), may provide information to foreign bodies or institutions for the supervision, regulation and control of financial intermediation activities, for the purposes of pursuing international financial crimes, without requiring reciprocity, except as established by international treaties or conventions.

Natural or legal persons who by any means disseminate false information about the financial system that induces or provokes the massive withdrawal of deposits from one or several financial intermediation entities, induce clients not to comply with acquired financial commitments, damaging and/or deteriorating the image and stability of a financial intermediation entity or of the national financial system, shall be considered authors of the crime of aggravated damage provided for and sanctioned by articles 198, 199, 232 and 358 of the Criminal Code. Excluded from the scope of this article are studies, analyses and opinions of a scientific nature that, based on authentic and verifiable information, are aimed at evaluating or rating the financial system or its actors, seeking to maximize their efficiency and development.

Note: Article amended by article 11 of Law No. 2297 of 20 December 2001.

TITLE EIGHT CONTROL, INSPECTIONS AND SANCTIONS

CHAPTER I CONTROL AND INSPECTIONS ARTICLE 92.- The Superintendency shall carry out the control of the activities of financial entities in accordance with this Law and regulatory norms.

ARTICLE 93.- The Superintendency shall require from each financial intermediation entity reports related to its situation and its operations, as well as accounting statements, specifying the content and the deadline for presentation of said reports and statements. The information requested by electronic means, backed by electronic signatures, shall have full validity and evidentiary force for all purposes.

Note: Article amended by article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 94.- Financial entities shall submit to the Superintendency, once a year, their financial statements, with an external audit opinion, prepared in accordance with the accounting standards contained in the Manual of Accounts for Banks and Financial Entities issued by the Superintendency and international accounting standards applicable to financial intermediation. The Superintendency shall maintain a registry of external audit firms.

29 Financial intermediation entities shall publish their financial statements as of 30 June and 31 December of each year, in a newspaper of national circulation.

Financial entities shall duly keep the books and documents relating to their operations, microfilmed or recorded on magnetic and electronic media, for a period of not less than ten (10) years, from the date of the last accounting entry.

Note: Article amended by article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 95.- The power of the Superintendency to inspect financial intermediation entities and auxiliary financial services entities comprises not only any office or dependency thereof, in the country or abroad, but also extends to the subsidiaries of the entities. In the case of financial conglomerates, supervision shall be carried out in coordination with the Superintendency of Pensions, Securities and Insurance.

Financial intermediation entities shall not be subject to supplementary or concurrent inspection or supervision by authorities of a national, departmental, municipal or university nature.

Note: Article amended by article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 96.- The Superintendent, the inspectors and officials of the Superintendency who carry out inspections, controls or any act of supervision in a financial intermediation entity and auxiliary financial services entity subject to the supervision of the Superintendency, for the purposes of this Law, shall have the power to gather whatever information is necessary and to require the statement of any person whom they consider necessary to examine in the course of the investigations they conduct with respect to any supervised entity; as well as the power to summon and require the presence of any person for the purpose of the aforementioned statement and to require the production of any book or document or a copy thereof. A detailed record shall be drawn up of the proceedings, which shall be signed by the officials acting and a representative of the supervised entity. For legal purposes, the records shall have the value of a public document.

Note: Article amended by article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 97.- Every financial intermediation entity, whatever its legal nature or form of incorporation and organization, shall have internal audit units and internal control bodies. The internal audit units shall be appointed by the Board of Directors or equivalent body.

The internal control bodies shall be elected by the shareholders' meeting or the assembly of partners or associates, as applicable, and shall answer to said meeting or assembly as the highest body of the will of the entity.

The control bodies of financial intermediation entities and their names shall be as follows:

a) In corporations, they shall be called statutory auditors, with the powers established by the Commercial Code and the obligations determined by this law.

b) In savings and credit cooperatives that fall under the scope of application of this Law, the control body is the Supervisory Council, which shall delegate to no more than two (2) of its members, called Supervisory Inspectors, powers for the permanent oversight of the entity, with the powers of the statutory auditors of corporations, insofar as applicable. The Supervisory Inspectors, as delegates of the Supervisory Council, shall answer to this instance and the latter, to the General Assembly of Members.

c) In mutual savings and loan associations, they shall be called Internal Comptrollers, and no more than two (2) associates may be appointed for such purpose, with powers for the permanent oversight of the entity, with the powers of the statutory auditors of corporations, insofar as

30 applicable. The Internal Comptrollers shall answer to the Board of Directors and to the General Assembly of Associates.

Note: Article amended by article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 98.- The responsibility of those who exercise the functions of internal control and auditing is absolute in legal terms. It is the obligation of the statutory auditors, supervisory inspectors and internal comptrollers to warn the shareholders, partners and associates, in writing, about the non-compliance with legal rules and provisions by the directors and administrators of the financial intermediation entity and auxiliary financial services entity, with communication to the Superintendency. The internal auditors shall warn the Board of Directors or equivalent body of the financial intermediation entity and auxiliary financial services entity about the non-compliance with legal rules and provisions.

Those who exercise the functions of internal control and auditing must not only perform functions related to the auditing of accounting aspects, but also oversee compliance with, application and dissemination of this Law, its regulatory rules and the provisions of the Superintendency, at all levels of decision-making and governance of the entity.

The members of the control and oversight bodies shall exercise their functions and powers without intervening in or obstructing the administrative management of the entity.

Note: Article amended by article 12 of Law No. 2297 of 20 December 2001.

CHAPTER II CONTRAVENTIONS, INFRACTIONS AND SANCTIONS ARTICLE 99.- When financial entities, their directors, syndics, managers and employees contravene the provisions of this Law or the regulatory norms, they shall be liable to the imposition of the following administrative sanctions:

1. Reprimand.

2. Fine to the financial entity of up to three (3%) percent of the minimum capital.

3. Temporary prohibition to carry out certain operations or operate certain sections.

4. Cancellation of the operating authorization, in accordance with the provisions of this Law.

5. Personal fines to directors, syndics, members of the board of directors, managers and employees; according to the seriousness of the fault, of up to five (5) times the monthly remuneration of the offender. In the case of directors, syndics and members of the Board of Directors or equivalent body who only receive per diem, the fine may not exceed ten (10) times said amount. These sanctions shall be applied to the entity, which must seek reimbursement from the sanctioned person.

6. Suspension of the activities of directors, syndics, managers, administrators and general attorneys-in-fact. The suspension may be temporary or permanent. In the first case, it must be backed by an express resolution of the Superintendency duly substantiated. In the second case, it shall be applied when there is a final judicial resolution or order; the sanctioned person or persons shall remain suspended from their activities during the substantiation of the appeals provided by Law against the suspension ruling.

7. Temporary or permanent disqualification of directors, syndics, managers, administrators, general attorneys-in-fact and employees from performing any function in the financial system.

Note: Item incorporated by article 12 of Law NP 2297 of 20 December 2001.

31

8. Temporary or permanent disqualification of shareholders who have contributed to the deterioration of the financial intermediation entity from performing any function in the financial system.

Note: Item incorporated by article 12 of Law No. 2297 of 20 December 2001.

These sanctions shall be applied by the Superintendent without prejudice to the other sanctions established by Law and the civil or criminal liability that may arise.

Acts that may constitute the commission of a crime shall be duly documented for their referral, with a report to the Public Ministry, so that it may promote criminal action in accordance with the provisions of

article 124 of the Political Constitution of the State.

Note: Last paragraph incorporated by article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 100.- Internal and external auditors, risk raters, appraisal experts and evaluators of financial intermediation entities and financial auxiliary services, who in the performance of their duties for which they have been contracted, lead to erroneous and untimely actions in relation to financial entities, the Central Bank of Bolivia and the Superintendencies of Banks and Financial Entities, of Pensions, Securities and Insurance, and of Hierarchical Resources shall be sanctioned by the respective Superintendency, in accordance with this Law and its regulatory norms, without prejudice to the other sanctions established by Law and the civil or criminal liability that may arise.

Note: Article modified by article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 101.- The reprimand shall be in writing. It shall apply to minor faults, infractions or omissions of the regulations, statutes, internal norms and policies, instructions and circulars of the Superintendency, incurred by negligence or imprudence not attributable to the legal representatives, attorneys-in-fact and employees of the entity, which do not cause damage or economic harm to the financial entity or its clients and are remedied or regularized. Recidivism in the infraction shall be sanctioned with a fine.

ARTICLE 102.- The fines established in numerals 2 and 5 of article 99 shall be applicable to the financial institution as a legal person, when the infractions or omissions benefit the financial entity in any form; they shall be applied to directors, syndics, members of Boards of Directors, attorneys-in-fact, managers and employees, according to the degree of their responsibility. The sanction shall be applied for acts and facts committed by negligence or imprudence attributable to the official and that could or should have been avoided.

ARTICLE 103.- The cancellation of the operating authorization shall be adopted only when the financial intermediation entity is intervened in accordance with the provisions of this Law.

Note: Article modified by article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 104.- When the infraction has produced an economic benefit to the entity, its shareholders, directors and/or administrators; the Superintendency, independently of the administrative sanction it imposes, shall order as a preventive measure the custody of the benefit while the legal appeals that may be filed are substantiated. The Superintendency shall order the delivery of said benefits, in accordance with the judicial decision of the legal appeals filed.

In case no legal appeal is filed, the benefit shall constitute income for the General Treasury of the Nation.

Note: Last paragraph incorporated by article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 105.- The directors, general attorneys-in-fact, syndics, administrators, managers, employees, members of the board of directors and members of the control and surveillance bodies of a financial intermediation entity or financial auxiliary services, may not influence in any way to obtain for their own benefit, that of their relatives or third parties, the provision of

32 services by the entity in which they carry out their activities, with advantages and under special or extraordinary conditions, nor may they use their influence to obstruct or impede the investigation of a crime by a competent authority. In the event of non-compliance with this rule, the Superintendency shall apply the sanctions referred to in Article 99 of this Law.

Note: Article incorporated by Article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 106.- Note: Article repealed by Article 69 of Law No. 1732 of 29 November 1996.

ARTICLE 107.- The financial entity shall inform the Superintendency in writing, under its responsibility, within ten (10) calendar days following knowledge of any criminal act committed in the entity by its officials or by third parties, as well as when directors, syndics, managers or employees are sanctioned for criminal acts.

Financial intermediation entities shall inform the Financial Investigations Unit (UIF)

about suspicious operations, which within the following forty-eight (48) hours must issue a written instruction.

In the event that within the following forty-eight (48) hours the UIF does not issue a written instruction to the financial intermediation entity, the latter shall assume that the relationship with the client cannot continue. The financial intermediation entity, its directors, managers, administrators or officials shall be exempt from civil and criminal liability with respect to the suspension of the relationship with that client.

Note: Second and third paragraphs incorporated by Article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 108.- The director, syndic, administrator, manager, attorney-in-fact or employee administrator or member of the board of directors of a financial intermediation entity, who knowingly executes or permits prohibited or unauthorized operations under this Law, which infringe the special provisions regulating financial intermediation entities, shall be jointly and severally and unlimitedly liable to the entity, as set forth in Articles 321, 322,

323 and 327 of the Commercial Code, without prejudice to the fact that, in case of fraud, the Superintendency shall refer the matter to the Public Ministry so that it may initiate criminal action in accordance with the provisions of Article

124 of the Political Constitution of the State.

Note: Article amended by Article 12 of Law No. 2297 of 20 December 2001.

ARTICLE 109.- The Superintendent, before applying a sanction, must notify the corresponding charge to the institution or alleged offender, granting a period of no less than two (2) nor more than seven (7) days to make their defense or pertinent explanation.

ARTICLE 110.- The sanctions imposed by the Superintendent shall be brought to the attention of the Board of Directors or equivalent body of the financial entity.

The President of the sanctioned entity must inform the General Shareholders' Meeting or equivalent body about all sanctions imposed.

ARTICLE 111.- The fines imposed by the Superintendency in application of this Law shall constitute income for the General Treasury of the Nation.

TITLE NINE REGULARIZATION, VOLUNTARY LIQUIDATION AND INTERVENTION OF FINANCIAL INTERMEDIATION ENTITIES

33

CHAPTER I REGULARIZATION PROCESS Note: Title and chapter designation amended by Article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 112.- A financial intermediation entity is in a regularization process when it incurs one or more of the following situations:

a) Losses are equal to or greater than thirty percent (30%) and less than fifty percent (50%) of primary capital.

b) Its capital adequacy ratio is less than that required by legal provisions and greater than the limit established in subsection c) of Article 120 of this Law.

c) Legal reserve deficiencies greater than one percent (1%) of the required amount, for two (2) consecutive periods or four (4) discontinuous periods within one year.

d) When the ratio of first-class assets to total deposits received by the entity is less than the figure determined by the Committee on Financial Prudential Standards (CONFIP), within a range of zero point eight (0.8) to one point two (1.2), at the request of the Superintendency of Banks and Financial Entities. First-class assets are comprised of the direct portfolio of category 1 and 2, cash and cash equivalents, temporary investments, property and equipment, and permanent investments in securities with investment grade rating.

e) Repeated non-compliance with the written instructions and orders of the Superintendency to a financial intermediation entity.

f) Presentation of false financial information or fraudulent documentation, duly substantiated.

g) Existence of management practices that seriously endanger public deposits, the liquidity and solvency situation of the entity, such as:

i. Capital contributions from shareholders are financed directly or indirectly through the financial intermediation entity itself.

ii. That the external auditors have abstained from issuing an opinion, that their opinion is adverse, or that the financial intermediation entity has omitted the publication of the external audit report.

iii. Appropriation or use in its operations of public or private funds entrusted in mandate or trust to the entity.

iv. Granting of credits, investments or other contingent operations with a borrower or group of borrowers, outside the limits permitted by Law.

v. Conducting credit operations, contingent operations and investments with borrowers or borrower groups linked to the financial intermediation entity, or with the guarantee of its own shares.

Note: Article amended by Article 13 of Law No. 2297 of 20 December 2001.

Subsection a) amended by Article 2 of Law No. 2682 of 5 May 2004.

ARTICLE 113.- When the financial intermediation entity incurs any of the grounds of the preceding article, its Board of Directors or equivalent body and/or its administrators must report it immediately to the Superintendency.

34 If the Superintendency is the one that detects the occurrence of any of the grounds indicated in the preceding article, the sanctions provided for in this Law shall be imposed on the Board of Directors or equivalent body and administrators. Additionally, the Superintendency shall summon the Board of Directors or equivalent body and the administrators of the financial intermediation entity, to notify them of the start of the mandatory regularization process, indicating the facts that motivated it.

In any of the situations described in the two preceding paragraphs, the Board of Directors or equivalent body and the administrators shall obligatorily prepare and submit a regularization plan within a period no greater than ten (10) business days from the date of the report or notification, as the case may be.

The Superintendency, within the following five (5) business days from the submission of the regularization plan, shall rule on it. If there are observations, the plan may be amended only once, within the following two (2) business days.

The plan shall necessarily contemplate the regularization of the facts that motivated it. The regularization period may not exceed three (3) months, from the non-objection of the plan by the Superintendency. This may end before the established deadline, when:

a) The financial intermediation entity demonstrates, to the satisfaction of the Superintendency, that it has remedied the facts that gave rise to the regularization.

b) The financial intermediation entity incurs any of the grounds indicated in subsections a), b), c) and e) of article 120 of this Law.

The non-submission or rejection of the regularization plan shall be grounds for intervention in accordance with the provisions of subsection d) of article 120 of this Law.

The submission of the regularization plan shall not exempt the financial intermediation entity and its board of directors or equivalent body and administrators from the provisions of articles 98, 99 and 108 of this Law.

During the term of the regularization plan, the financial intermediation entity may not distribute its profits or surplus, directly or indirectly.

Note: Article amended by Article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 114.- The regularization plan prepared and submitted by the financial intermediation entity must contain all measures necessary to overcome the facts that motivated the regularization process, among which the following are cited by way of example:

a) Absorption of losses against equity accounts.

b) Capital replenishment.

c) Replenishment of legal reserve funds.

d) Immediate restitution of State resources, to the satisfaction of the affected public entity.

e) Implementation of a program for the sale of non-performing assets.

f) Submission of a plan to reduce administrative expenses.

g) Removal of directors, administrators and internal control bodies, if applicable.

h) A program for sale, merger or capital expansion.

35

i) Deposit in the Central Bank of Bolivia or investment in securities issued by the Bolivian State of all increase in deposits, as well as of the resources from the recovery of credits, both for principal and interest, and the recovery of other assets.

j) Suspension of active, contingent and auxiliary service operations to financial intermediation.

k) Commitment not to enter into new service contracts, or novation of existing ones.

l) Conducting special external audits, under the terms established by the Superintendency.

m) Suspension of all projected investment in financial services, pension, securities and insurance entities or sale of existing ones.

n) Commitment not to substitute guarantees or release them to the detriment of the entity.

o) Suspension of acquisition of real estate.

p) Suspension of opening branches, agencies and representative offices.

q) Implementation of a liability restructuring program.

r) Implementation of a credit portfolio recovery program.

Note: Article amended by Article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 115.- The regularization plan shall establish the conditions, procedures, goals and measurement indicators to verify its compliance.

The submission of the plan must be made with:

i. Joint sworn statement of the Directors or members of the Councils and principal executives of the entity, on the veracity of the financial statements and the non-existence of other facts that could negatively affect the equity situation of the entity.

ii. Commitment of the Directors and legal representatives to execute the submitted plan.

iii. Report of the Control Bodies to the Superintendency, ruling on the situation of the financial intermediation entity.

iv. Minutes of the extraordinary meeting or assembly of shareholders, partners or associates, which considered and approved, at a minimum, the regularization plan and the adjustments to the financial statements Note: Article amended by Article 13 of Law No. 2297 of 20 December 2001.

CHAPTER II VOLUNTARY LIQUIDATION, MERGER AND TRANSFORMATION ARTICLE 116.- The voluntary liquidation of a financial intermediation entity shall only proceed after it has returned all of its deposits and with prior authorization from the Superintendency. For this purpose, the provisions of the Commercial Code shall apply.

Note: Article amended by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 117.- The liquidation or merger of State financial entities shall be resolved by the Executive Branch with a reasoned opinion from the Superintendency before the Ministry of Finance.

36 ARTICLE 118.- The Superintendency shall authorize the merger of financial entities, in accordance with the provisions of the Commercial Code.

Note: Article amended by article 90, numeral 2, of Law No. 1670 of 31 October 1995.

ARTICLE 119.- Private financial funds may transform into Banks, with prior authorization from the Superintendency and in accordance with the regulations approved by CONFIP.

Savings and credit cooperatives may transform into private financial funds or Banks, through the individualization of the ownership right of their members, with prior authorization from the Superintendency and in accordance with the regulations approved by CONFIP.

Note: Article amended by article 13 of Law No. 2297 of 20 December 2001.

CHAPTER III INTERVENTION OF FINANCIAL INTERMEDIATION ENTITIES Note: Name of the chapter amended by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 120.- The grounds for intervention are any of the following or a combination thereof:

a) Cessation of payments due to non-compliance in the payment of one or more liquid and due obligations.

b) Loss equal to or greater than fifty percent (50%) of primary capital.

c) Insufficiency greater than fifty percent (50%) of the level of capital adequacy ratio established in article 47 of this Law.

d) The non-submission or rejection of the regularization plan.

e) If during the execution of the regularization plan the financial intermediation entity carries out operations that evidently make it unviable.

f) If upon expiration of the term of the regularization plan the facts that motivated the regularization process have not been remedied.

Note: Article amended by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 121.- The Superintendency, for the grounds indicated in the previous article, by express resolution shall order the intervention of the affected financial intermediation entity and the appointment of an Intendant Interventor, for the purpose of applying the resolution procedure or the forced judicial liquidation in accordance with the provisions of this title.

The intervention shall last until the Superintendency revokes the operating license of the intervened entity.

As an effect of the intervention resolution, the Superintendency may suspend totally or partially the operations of the intervened entity for a term not exceeding thirty (30) calendar days, extendable only once.

Preventive concurso proceedings, nor bankruptcy of financial intermediation entities, shall not proceed. The legal regime of the forced liquidation of financial intermediation entities shall be governed by the provisions of chapter V of this title. When bankruptcy is requested for circumstances that would make it admissible according to common legislation, the judges shall reject it ex officio within forty-eight

37

(48) hours following the filing of the petition, and must inform the Superintendency of this fact.

Note: Article amended by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 122.- From the date of publication of the intervention resolution in a written medium of national circulation, the periods of prescriptions, expiration and others, as well as the procedural terms in the lawsuits filed for the recovery of the credit portfolio and the ordinary processes that could have emerged from them, are interrupted. These periods shall automatically run again from the next business day after the assignments of the credits to their new holders are perfected, with public notification in the press to the assigned debtor to be made by the new holder.

During the intervention, the rights with respect to the intervened entity of the shareholders, partners or associates and other creditors thereof shall be automatically suspended. Likewise, the directors, internal control bodies, administrators, managers and general attorneys-in-fact of the intervened entity cease in their functions, also leaving without effect the powers and faculties of administration granted, with the consequent prohibition of carrying out acts of disposition or administration of goods or securities of the entity. If such acts of administration or disposition are carried out, they shall be null and void by operation of law. From the date of the intervention resolution, the annotation or registration in public registries of acts carried out by the directors, internal control bodies, administrators, managers and general attorneys-in-fact of the intervened entity shall require, under penalty of nullity, prior authorization from the Intendant Interventor.

Note: Article amended by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 123.- The general attributions of the Intendant Interventor are the following:

a) Take possession and assume the legal personality and legal representation of the intervened financial intermediation entity, as well as the competences that legally and statutorily correspond to the general shareholders' meetings, assemblies, directive and administrative bodies of the entity.

b) Record in the financial statements of the intervened entity the write-offs, reserves, provisions and other adjustments determined by the Superintendency that were pending as of the date the intervention resolution was issued.

c) Perform the functions and powers corresponding to it within the resolution procedure or the forced judicial liquidation in accordance with the provisions of this Law, the intervention resolution and those assigned to it by the Superintendency.

d) Pay the expenses of the intervention charged to the assets of the intervened entity. The following shall be considered intervention expenses:

i. Social benefits of the employees of the intervened entity, calculated in accordance with the official payrolls submitted to the Ministry of Labor.

ii. Remuneration of employees of the intervened entity and of the Intendant Interventor.

iii. General operating expenses.

iv. Expenses to carry out the transfer of privileged obligations and assets in the execution of the resolution procedure, as well as expenses for the constitution of the trusts referred to in articles 129 and 134 of this Law.

v. Other expenses that must be incurred to bring the intervention to a successful conclusion.

38 The Intendant Interventor shall be hired under the regime of the General Labor Law and shall have a monthly remuneration in accordance with the salary levels of general managers of the private financial sector, charged to the resources of the intervened entity.

Note: Article amended by article 13 of Law No. 2297 of 20 December 2001.

CHAPTER IV RESOLUTION PROCEDURE Note: Chapter incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 124.- For the purposes of this Law, resolution procedure means that intended to protect the public's deposits and other privileged obligations, subsequent to the intervention and prior to the revocation of the operating license of the intervened financial intermediation entity.

Once the liquid reserves have been constituted to cover the estimated expenses of the intervention in accordance with the provisions of subsection d) of article 123 of this Law, the resolution procedure shall consist of the acts of the Superintendency intended to:

a) Exclude the first and second order privileged obligations recorded in the financial statements of the intervened entity, as provided in article 128 of this Law.

b) Exclude the assets of the intervened entity for an amount equivalent to the first and second order privileged obligations. The assets shall be excluded in accordance with their book value, net of provisions, reserves and any other adjustment made in accordance with subsection b) of

article 123 of this Law.

c) Instruct the Intendant Interventor to formalize the transfer of the first order privileged obligations in favor of financial intermediation entities, which shall receive in exchange the assets referred to in subsection b) above and/or first order participations in the trust referred to in subsection d) below.

d) Instruct the Intendant Interventor to formalize the transfer of the assets referred to in subsection b) above in favor of financial intermediation entities or to a trust with the characteristics set forth in article 129 of this Law.

Determine the financial intermediation entities awarded the assets and obligations referred to in the preceding subsections, as well as, where applicable, the trust's administering entity.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 125.- In order to bring the resolution procedure to a successful conclusion and make possible the transfers indicated above, the Financial Restructuring Fund (FRF) shall support with one or a combination of the following mechanisms, at the discretion of the Superintendency:

a) In the case of direct transfer of the assets of the intervened entity in favor of financial intermediation entities indicated in subsection c) of article 124 of this Law, the FRF shall constitute a guarantee of up to twenty percent (20%) of the value of the transferred assets.

b) Contributions in cash or in bonds to the trust referred to in subsection d) of article 124 above in exchange for a second order participation therein.

c) Firm purchase of the first order participations mentioned in subsection a) of

article 124 of this Law.

39 Until 1 January 2005, the support mechanisms charged to the FRF shall be carried out by the Central Bank of Bolivia on account of the General Treasury of the Nation, whose total contribution may not exceed fifty percent (50%) of the privileged obligations of the intervened financial intermediation entity. As of 1 January 2005, the total contribution of the FRF may not exceed thirty percent (30%) of the privileged obligations of the intervened financial intermediation entity.

Additionally and for the purpose of supporting the resolution procedure, at the request of the Superintendency, public entities holding second order privileged obligations shall assume second order participations in the trust referred to in subsection d) of article 124 above. In this case, the amount of the trust's assets shall be increased by the value of these participations.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 126.- In order to facilitate for acquiring entities within resolution processes the absorption of the impact entailed by the acquisition of assets and the assumption of liabilities, the Superintendency shall establish adjustment schedules and lower risk-weighting coefficients for the participations in the trust, the transferred assets and the trust for purposes of calculating the capital adequacy ratio of the acquiring entities and of the trust's administering entity, as the case may be; likewise, the Central Bank of Bolivia may make its legal reserve policy more flexible and shall provide liquidity windows with respect to these entities.

Note: Article incorporated by Article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 127.- The Financial Restructuring Fund (FRF) is created for the purpose of supporting the resolution procedures of financial intermediation entities under the conditions provided for in this Law.

The Board of Directors of the FRF shall be composed of three (3) unpaid representatives, two (2) of whom shall be appointed by the financial intermediation entities and the third, with veto power, appointed by the Central Bank of Bolivia. Those who are expressly prohibited by Article 10 of this Law and Article 47 of Law No. 1670 of the Central Bank of Bolivia of 31 October 1995 may not be appointed as members of the Board of Directors. The term of the directors appointed by the financial intermediation entities shall be four (4) years. The powers of the Board of Directors of the FRF are limited to ensuring the proper administration by the Central Bank of Bolivia of the FRF's resources.

The FRF's resources are constituted by mandatory contributions from financial intermediation entities that hold an operating license issued by the Superintendency and shall be used solely in the resolution procedures defined in this Law. These resources shall not be subject to audit by the Comptroller General of the Republic, as they are not included within the provision of Article 3 of Law No. 1178 SAFCO. In the event that the FRF's resources are insufficient to support the execution of any resolution procedure, the Central Bank of Bolivia, on behalf of the General Treasury of the Nation, shall advance the missing resources.

The reimbursement shall be made under the conditions agreed upon by the General Treasury of the Nation and the FRF, charged against future contributions made by the intermediation entities to the FRF.

The contributions of the financial intermediation entities to the FRF shall be calculated on the total public deposits recorded in the financial statements of each financial intermediation entity, based on the average daily balance of deposits of the previous quarter. These contributions shall be paid by the financial intermediation entities into the account opened at the Central Bank of Bolivia, as from 1 January 2002. The quarterly contribution rate to the FRF for the first year shall be equal to zero point fifteen per thousand (0.15‰). For the second year, the quarterly rate shall be equal to zero point forty-five per thousand (0.45‰). For the third year, the quarterly rate shall be equal to one per thousand (1.00‰). As from the fourth year, the quarterly rate shall be equal to one point twenty-five per thousand (1.25‰). The contributions of each entity are considered an expense for them. The Central Bank of Bolivia shall automatically debit the

40 amount corresponding to the contributions from any of the accounts opened by the financial intermediation entities at the Issuing entity.

When the contributions made by a financial intermediation entity reach the amount of five percent (5%) of the public deposits recorded in its financial statements, the Central Bank of Bolivia may exempt that entity from payment of the contributions, unless the FRF's resources are committed by resolution procedures.

The Central Bank of Bolivia shall administer or invest the FRF's resources in securities or financial operations analogous to those carried out in the management of international reserves and of the Liquid Asset Requirement Fund (RAL Fund). The yield, after deducting the commission received by the Central Bank of Bolivia in its capacity as administrator, shall be used to capitalize the FRF.

The FRF's resources may not be attached or subject to precautionary measures, nor be the object of any set-off or transaction. Their use shall be restricted solely to supporting resolution procedures.

The provisions of this article shall be regulated by the Executive Branch.

Note: Article incorporated by Article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 128.- For purposes of the resolution procedure, without implying an order of priority among those of its rank, the privileged obligations recorded in the financial statements of the intervened entity as of the date the intervention resolution is issued are:

First order:

a) Deposits of the private sector in current account, demand, savings account and fixed term, excluding operations with other financial intermediaries and deposits constituted in violation of legal or regulatory provisions.

b) Cash mandates, including foreign trade prepayments, tax collections and withholdings, drafts, transfers with legally executed contracts, duly documented and recorded in the financial statements of the intervened entity prior to its intervention, provided that the holder is from the private sector.

c) Judicial deposits.

Second order:

1. Deposits of the public sector in current account, demand, savings account and fixed term.

2. Obligations with the Central Bank of Bolivia.

3. Obligations with financial intermediation entities abroad.

4. Obligations with the Financial System Development and Productive Sector Support Fund (FONDESIF) and, as long as the Republic of Bolivia maintains a majority participation in the capital, obligations with Nacional Financiera Boliviana S.A.M. (NAFIBO SAM).

5. Tax obligations of the intervened financial intermediation entity Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 129.- The trust indicated in subsection d) of article 124 of this Law shall issue participations that may be of various categories, conferring different rights to their holders. The transfers of excluded assets to the trust shall be irrevocable. The trust shall only be contestable by the Superintendency, the beneficiaries or the trustee. This trust shall be instrumented

41 by means of a standard contract prepared by the Superintendency and shall be governed by the provisions of the

Third Section of the Fourth Chapter of the Seventh Title of the Commercial Code, with the following specifications:

a) The object of the trust is the administration, in its broadest terms, of the autonomous patrimony constituted by the assets excluded from the balance sheet of the intervened entity to pay the participations issued by said trust.

b) The constitution of the trust shall be instrumented by means of a public deed granted by a Notary Public, and the transfers to the trust shall be registered in the corresponding public registries in accordance with current legal norms, the presentation of the trust constitution contract being sufficient for registration. In the event that the trust includes assets and guarantees subject to registration, the corresponding registrations or annotations shall not alter the original preference that corresponded to the trustor. In these registrations or annotations, the rate or tariff provided for contracts without amount shall be applied.

c) For the constitution of the trust, the designation of the trustee shall be made by the Superintendent.

d) The beneficiaries of the trust are the holders of the participations who receive them in consideration either for having assumed the first-order privileged obligations or for being holders of second-order privileged obligations. The rights and obligations that the Commercial Code attributes to the trustor shall correspond exclusively to the beneficiaries.

The beneficiaries may transfer, pledge and carry out any act of dominion over these participations only with other financial intermediation entities, with the Central Bank of Bolivia until 1 January 2005 and from that date with the FRF. The issuance and negotiation of these participations shall not be governed by Law No. 1834 of the Securities Market of 31 March 1998.

e) For the purposes of article 1415, numeral 4, of the Commercial Code, the competent administrative authority shall be the Superintendency.

f) The remuneration of the trustee shall be determined in the constitutive contract and shall be effective against the autonomous patrimony, with preference to the payment of the participations.

g) The trustee at the end of its management shall issue a final report to the beneficiaries.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 130.- The selection of the financial intermediation entities participating in the resolution process shall be carried out exclusively subject to the following:

a) The Superintendency shall convene an informative meeting by any means with a minimum of three

(3) financial intermediation entities.

b) At the informative meeting, the Superintendency shall explain to the attending financial intermediation entities the content of the intervention resolution and shall deliver to the entities that express interest the information necessary for them to present their proposals within a period of forty-eight

(48) hours.

c) The award shall be made in the same act of receipt and opening of proposals, by a committee composed of a representative of the Ministry of Finance, a representative of the Central Bank of Bolivia and a representative of the Superintendency, considering competitive methods established in the information provided above.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

42 ARTICLE 131.- The transfers of excluded assets during the resolution procedure are irrevocable. The shareholders and creditors of the intervened financial intermediation entity shall have no action or right whatsoever against the acquirers of the excluded assets.

The acts authorized, entrusted or arranged by the Superintendency and the Intervening Intendant within the framework of this Law in relation to the transfer of assets and privileged obligations of the intervened entity do not require any judicial authorization, nor can they be deemed ineffective with respect to the creditors of the intervened entity. No judicial sentence or administrative resolution shall suspend the acts carried out during the intervention.

No acts of disposition such as embargoes or precautionary measures of any kind may be carried out on part or all of the assets of the intervened entity until the revocation of its operating license, except for the transfer of assets ordered by the Superintendency and the operations carried out by the Intervening Intendant.

The transfers of assets, liabilities and contingents of the intervened financial intermediation entity shall not require the consent of the debtors, creditors or any holders, entailing full and irrevocable transmissions for all legal purposes. These transfers produce full effects of transmission of obligations and rights.

The documents for the transfer of assets, liabilities and contingencies, signed with natural or legal persons including those of the State, shall be recorded before a Notary Public.

From the moment the intervention of the intervened entity is ordered, it is exempt from the payment of taxes, fees, national or municipal tariffs of any kind; those generated up to the moment of the intervention must be paid in accordance with the Law.

The transfers of assets or liabilities or contingencies of the intervened entity are exempt from the payment of taxes, fees, national or municipal tariffs of any kind.

The transfers of assets and liabilities shall be registered in the corresponding public registries in accordance with current legal norms, and the presentation of the respective contract shall be sufficient to carry out the registration or annotation. In the event that the transfer includes goods and guarantees subject to registration, the corresponding registrations or annotations shall not alter the original preference that corresponded to the transferor. In these registrations or annotations, the rate or tariff provided for contracts without amount shall be applied.

The guarantees and sureties granted by the intervened entity shall be resolved by operation of law from the intervention resolution in application of the provisions of the first paragraph of article 924 of the Civil Code, with the return of the commission for the unused period and the assignment of the counter-guarantees in favor of the beneficiary. Likewise, the guarantees granted in favor of the Central Bank of Bolivia, except for repo operations and those constituted with the Liquid Asset Reserve Fund (RAL), shall be resolved by operation of law from the intervention resolution.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 132.- With the residual balance sheet of the intervened entity, made up of the assets and liabilities not excluded in the resolution procedure, after deducting the intervention expenses, the Intendant Interventor shall form a trust for liquidation that shall be governed by the same rules for the judicial forced liquidation procedure established in chapter V of this title. With the formation of the trust for judicial forced liquidation, the resolution procedure shall be concluded and the Superintendency shall proceed to revoke the operating license of the intervened entity.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

CHAPTER V

43 JUDICIAL FORCED LIQUIDATION Note: Chapter incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 133.- For the purposes of this Law, the judicial forced liquidation of financial intermediation entities shall be requested from the Partido Judge of the domicile of the intervened entity by the Superintendency, with the intervention resolution and the revocation of the operating license. The judicial forced liquidation shall be governed by the provisions of the Commercial Code relating to the bankruptcy procedure with the specialities provided in this chapter.

For the purpose of the judicial forced liquidation, the Intendant Interventor shall proceed to transfer all the assets recorded in the balance sheet of the entity as of the date of its intervention in favor of a trust for judicial forced liquidation. The transfers of assets to the trust shall be non-reclaimable. The trust may only be challenged by the Superintendency, the beneficiaries or the trustee. Likewise, the Intendant Interventor shall deliver to the trust's administering entity the segregated assets recorded in memorandum accounts, for their return in accordance with the provisions of article 135 of this Law.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 134.- The trust indicated in the preceding article shall be instrumented through a standard contract prepared by the Superintendency and shall be governed by the provisions of Section Three of Chapter Four of Title Seven of the Commercial Code, with the specifications indicated in this article and the following:

a) The purpose of the trust shall be the administration, collection, realization of assets and expectant rights, so that with the assets or the product of this trust the credits that are pending payment are honored in accordance with the resolution of priorities issued by the Partido Judge in compliance with article 137 of this Law.

b) The constitution of the trust shall be instrumented through a public deed granted by a Notary Public, and the transfers to the trust shall be registered in the corresponding public registries in accordance with current legal norms, and the presentation of the trust constitution contract shall be sufficient for registration. In the event that the trust includes goods and guarantees subject to registration, the corresponding registrations or annotations shall not alter the original preference that corresponded to the trustor. In these registrations or annotations, the rate or tariff provided for contracts without amount shall be applied.

c) For the constitution of the trust, the designation of the trustee shall be made by the Superintendent.

d) The beneficiaries of the trust are the holders of the credits in the order of the judgment of degrees and preferences issued by the Partido Judge hearing the case. The rights and obligations that the Commercial Code attributes to the trustor shall correspond exclusively to the beneficiaries.

e) For the purposes of article 1415, numeral 4, of the Commercial Code, the competent administrative authority shall be the Superintendency.

f) The remuneration of the trustee shall be determined in the constitutive contract and shall be paid from the autonomous patrimony, with preference over the payment of debts. The Intendente Interventor may cancel in advance up to one (1) year of the trustee's remuneration based on the quality of the assets to be administered.

g) The delivery of the assets to the trustee shall be made through inventories prepared by the Intendente Interventor with notarial intervention, in which the condition and the documentation available are accredited.

44

h) The trustee at the end of its management shall issue a final report to the beneficiaries.

The trustee is responsible for the administration of the assets and for paying the beneficiaries in the manner provided in articles 136 and 137 that follow, therefore the appointment of a receiver is not appropriate.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001, ARTICLE 135.- The trustee shall publicly notify all those who have in their possession goods or securities of the intervened financial intermediation entity for their return within a period no greater than thirty (30) calendar days, computable from the public notification. In case the return of the goods or securities is not made, the trustee must inform such situation to the Partido Judge who knows the case, so that the latter remits the proceedings to the Public Ministry so that it promotes the criminal action in accordance with the provisions of article 124 of the Political Constitution of the State.

Likewise, the trustee shall publicly notify so that every owner of goods or securities left in custody, safe deposit boxes, trusts, securities in collection or segregated assets with legally signed contracts, duly documented and registered in the financial statements of the financial intermediation entity before its intervention, withdraws their goods within thirty (30) calendar days, computable from the public notification. In case of non-existence of said goods or securities, the trustee must inform the Partido Judge who knows the case so that the latter remits the proceedings to the Public Ministry so that it promotes the criminal action in accordance with article 124 of the Political Constitution of the State.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 136.- Once the delivery of the assets to the trustee is concluded, the Intendente Interventor shall remit the list of pending debts to be paid in accordance with the financial statements as of the date of intervention of the intervened entity and the trust contract to the Partido Judge who knows the case, who shall be responsible for enforcing the trust contract and shall not have the faculties to modify or alter the terms and scope of said contract. From that moment, all the faculties and attributions of the Superintendency and of the Intendente Interventor over those assets cease, as well as with respect to the trust contract.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 137.- The Partido Judge within the term of five (5) business days of receiving the list of pending debts to be paid, shall issue the resolution of priorities, which must strictly adhere to the following order:

a) Cash mandates, including prepayments of foreign trade, collections and tax withholdings, drafts, transfers with legally signed contracts, duly documented and registered in the financial statements of the intervened entity before its intervention, as long as the holder is from the private sector.

b) Deposits of the private sector in current account, demand, savings account and fixed term, excluding operations with other financial intermediaries.

c) Judicial deposits.

d) Mortgage bonds.

e) Deposits of the public sector in current account, demand, savings account and fixed term.

f) Obligations with the Central Bank of Bolivia.

45

g) Obligations with the Fund for the Development of the Financial System and Support to the Productive Sector (FONDESIF) and, as long as the Republic of Bolivia maintains majority participation in the capital, obligations with the National Financial Bolivian S.A.M. (NAFIBO SAM).

h) Tax obligations of the intervened financial intermediation entity.

i) Capital balances of credits and mutuals in general in favor of the intervened entity, including bank credits or credits received from other types of institutions or individual or collective persons; whether these are state or private institutions.

j) Capital balances of other contractual debts.

k) Management checks and others issued by the intervened entity.

l) Other accounts payable.

m) Accrued unpaid interest.

n) Judicial, administrative, operational contingencies or obligations that emerge as a consequence of rulings of judicial actions in process as of the date of initiation of the intervention, as well as the deposits excluded in the solution procedure according to the terms of the judgment passed in authority of res judicata.

o) Subordinated obligations and bonds mandatorily convertible into shares.

p) Shares or contribution certificates. In the case of Savings and Loan Mutuals, article 65 of the Civil Code shall be applied as relevant.

The partido judge within the twenty-four (24) hours following the finalization of the resolution of priorities, shall instruct the trustee to pay the beneficiaries of the trust in the order established by the cited resolution and in accordance with the procedure indicated in the following article.

Note: Article incorporated by article 13 of ‘Law No. 2297 of 20 December 2001.

ARTICLE 138.- The trustee, within the term of five (5) calendar days of receiving the instruction from the partido judge, shall publish in three (3) media of national circulation, the resolution of priorities. On the same occasion, the fiduciary shall convene in writing or by publication the beneficiaries of the first priority level so that they appear within a term of ten (10) calendar days at the place and time indicated, so that, with the intervention of a Notary Public, they are informed that they may exercise their creditor rights through their notarial attorney in the manner provided in this article and the value of the trust assets for the payment of their claims.

For the purposes of payment of claims, the value of each trust asset shall be the result of multiplying the nominal value of the asset by the ratio of the total claims to the nominal value of the total trust assets. If the nominal value of the total trust assets is less than the total claims, the value of each asset shall correspond to its nominal value, in which case the application of article 139 of this Law shall apply.

Within a term of five (5) calendar days after the meeting is held, the beneficiaries shall appoint a notarial attorney before the fiduciary with full decision-making powers to exercise their rights in relation to the payment of the principal amount of their claims with the trust assets to be chosen by the attorney.

The notarial attorney, within a term of fifteen (15) calendar days from their appointment, shall proceed to select and receive from the fiduciary the trust assets for the total principal amount of the claims they represent, which shall be transferred in their favor. From that moment, the notarial attorney is responsible for the manner and distribution of those assets to their principals, and the fiduciary's responsibility regarding those assets ceases.

46 In the event that the beneficiaries do not appoint their notarial attorney or that the latter does not exercise their right to select assets within the indicated terms, the beneficiaries shall lose their rank and automatically move to the last level of the priority resolution.

If there are remaining assets in the trust, within a term of three (3) business days after the selection of assets by the notarial attorney of the previous priority level is concluded, the fiduciary shall convene the beneficiaries of the next priority level with the procedure and for the same purposes established in the preceding paragraphs, and so on successively with the beneficiaries of the following priority levels, until the total claims are paid or the trust assets are exhausted, whichever occurs first.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 139.- If the assets are insufficient to pay the total claims, the Partido Judge shall open a evidentiary term of sixty (60) calendar days to establish whether the administration of the intervened entity was fraudulent; once the term expires, the judge shall issue a resolution qualifying the administration; this resolution shall only admit the appeal with devolutive effect, and the Partido Judge must refer the records to the Public Ministry, in accordance with the provisions of article 124 of the Political Constitution of the State, so that it may promote the corresponding criminal action against the persons identified in the resolution issued by the Judge.

In such case, the creditors who were not fully satisfied with the trust assets referred to in article 138 above, as well as the persons whose rights were not recorded in the financial statements of the intervened entity at the time of its intervention, shall retain the power to exercise judicial actions personally for the unpaid amount of their claims or to demand compliance with the aforementioned rights, against those who are found to be the authors of the aforementioned fraudulent administration.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

ARTICLE 140.- Once the procedure indicated in article 138 above is concluded, the fiduciary shall present a final report with an external audit opinion on activities to the Partido Judge who issued the priority resolution. If from said report it is established that assets still remain in the trust, the Partido Judge shall order the delivery of these in favor of the shareholders and partners of the intervened financial intermediation entity and, in the case of savings and loan mutuals, to a public university of the legal domicile of the intervened entity. With this act, the trust contract shall be concluded, by virtue of which the Partido Judge shall order that the National Commerce Registry Service (SENAREC), or the National Institute of Cooperatives (INALCO), or the Departmental Prefectures, as applicable, declare the extinction of the legal personality of the intervened financial intermediation entity.

The resolution of extinction of legal personality by the competent body must be issued within a term of (5) business days following the order of the Partido Judge, notifying the National Internal Tax Service, Municipal Governments and social security entities and others, for their removal from their registries.

The historical archives of the intervened financial intermediation entity shall remain in the possession of the Superintendency, which shall include in its budget the necessary items for their administration and custody.

Note: Article incorporated by article 13 of Law No. 2297 of 20 December 2001.

TITLE TENTH

CHAPTER I RESOURCES

47 Note: Chapter incorporated by article 14 of Law No. 2297 of 20 December 2001.

ARTICLE 141.- Except for the provisions of article 143 that follows, financial intermediation entities and auxiliary financial services shall be subject to the rules and procedures on administrative recourses of revocation and hierarchical appeal, which shall always have devolutive effect. Such procedures shall be subject to the special legal provision that regulates articles 41, subsection a), and

42 of Law No. 1864 on Property and Popular Credit of 15 June 1998.

The resolutions of the Superintendency of Hierarchical Recourses, as the body of last instance in the administrative sphere within the Financial Regulation System (SIREFI), conclude the administrative route and cause a state, leaving the contentious-administrative recourse enabled in accordance with Law, once the administrative route has been exhausted.

Note: Article incorporated by article 14 of Law No. 2297 of 20 December 2001.

ARTICLE 142.- The Attorney General of the Republic who acts as defendant in contentious-administrative processes shall, by way of information, inform the Superintendency of Hierarchical Recourses of the admission order of the recourse, and may request from it the background of the Definitive Resolution issued by the Superintendency of Hierarchical Recourses.

Note: Article incorporated by article 14 of Law No. 2297 of 20 December 2001.

ARTICLE 143.- The resolution of the Superintendency of Banks and Financial Entities ordering the intervention in accordance with the provisions of article 121 of this Law may only be challenged through the contentious-administrative route. For this purpose, the claim shall be filed before the Supreme Court of Justice complying with the requirements demanded by article 327 of the Code of Civil Procedure, must be signed by the absolute majority of the members of the former Board of Directors or equivalent body of the intervened entity, and must be directed against the Attorney General of the Republic and the Ministers of the Portfolios of Finance, of Justice and Human Rights, and of the Presidency.

The challenge of the intervention resolution shall not have suspensive effect. No judicial sentence or administrative resolution shall suspend the resolution procedure. Nor may attachments or precautionary measures be ordered on the assets or property of the intervened financial intermediation entity during the resolution procedure. What has been executed in the resolution procedure may not be left without effect, and the actions carried out shall cause a state.

Note: Article incorporated by article 14 of Law No. 2297 of 20 December 2001.

ARTICLE 144.- Note: Article repealed by article 90, numeral 2, of Law No. 1670 of 31 October 1995.

ARTICLE 145.- Note: Article repealed by article 90, numeral 2, of Law No. 1670 of 31 October 1995.

ARTICLE 146.- Note: Article repealed by article 90, numeral 2, of Law No. 1670 of 31 October 1995, ARTICLE 147.- Note: Article repealed by article 90, numeral 2, of Law No. 1670 of 31 October 1995.

ARTICLE 148.- Note: Article repealed by article 90, numeral 2, of Law No. 1670 of 31 October 1995.

ARTICLE 149.- Note: Article repealed by article 90, numeral 2, of Law No. 1670 of 31 October 1995.

48 ARTICLE 150.- Note: Article repealed by article 90, numeral 2, of Law No. 1670 of 3 1 October 1995.

ARTICLE 151.- Note: Article repealed by article 90, numeral 2, of Law No. 1670 of 31 October 1995.

CHAPTER II OF THE SUPERINTENDENCY OF BANKS AND FINANCIAL ENTITIES ARTICLE 152.- The Superintendency of Banks and Financial Entities is an institution of public law and of indefinite duration. It is governed by the provisions of this Law, its Organic Law, statutes and regulations.

ARTICLE 153.- The Superintendency, governing body of the control system of all collection of public resources and financial intermediation in the country, including the Central Bank of Bolivia, shall have the following objectives:

1. Maintain a sound and efficient financial system.

2. Ensure the solvency of the financial intermediation system.

ARTICLE 154.- The attributions of the Superintendency are:

1. Monitor compliance with the norms of financial intermediation.

2. Regulate the internal and external control system of all financial intermediation.

3. Exercise and supervise internal and external control, demanding compliance with legal provisions, technical and regulatory norms, from all public, private and mixed entities that carry out in the territory of the Republic intermediation between the supply and demand of loanable financial resources.

4. Supervise natural or legal persons that carry out auxiliary activities of financial intermediation.

5. Exercise consolidated supervision in accordance with article 6 of this Law.

Note: Numeral modified by article 14 of Law No. 2297 of 20 December 2001.

6. Incorporate into the scope of its competence, in agreement with the Central Bank of Bolivia, other persons or entities that carry out financial intermediation activities.

7. Prepare and approve the regulations of the control and supervision norms on financial intermediation activities.

8. Establish preventive systems of control and surveillance.

9. Control compliance with the norms on legal reserve and liquidity in the financial system.

10. Impose administrative sanctions on the entities under its control, when they infringe legal provisions.

11. Order the mandatory regularization and intervention of financial intermediation entities.

Note: Numeral modified by article 14 of Law No. 2297 of 20 December 2001.

49

12. Maintain a registry of officials and employees and former officials and former employees suspended or disqualified in the exercise of financial activity. This registry shall form a single database shared with the Superintendency of Pensions, Securities and Insurance, to which all institutions that are part of the Financial Regulation System shall have access.

Note: Numeral incorporated by article 14 of Law No. 2297 of 20 December 2001.

13. Enter into agreements with other foreign financial sector supervision bodies.

Note: Item incorporated by article 14 of Law No. 2297 of 20 December 2001.

14. Instruct accounting adjustments and regularizations to financial intermediation entities, resulting from their supervision and control work.

Note: Item incorporated by article 14 of Law No. 2297 of 20 December 2001.

15. Direct investigations of illicit proceeds legitimization and sign agreements with international bodies with analogous functions.

Note: Item incorporated by article 14 of Law No. 2297 of 20 December 2001.

For the fulfillment of the attributions conferred in this Law, the Superintendency must determine the criteria for classification and evaluation of assets and their provisions. Likewise, it must operate the Risk Information Center, define the minimum requirements for institutional information and regulate the application of sanctions, within the framework of this law.

ARTICLE 155.- The administrative jurisdiction of the Superintendency is national in character. Its competence concerning the application of this law is exclusive and non-delegable. The domicile of the Superintendency is the seat of government.

ARTICLE 156.- The Superintendent shall be appointed by the President of the Republic for a period of six (6) years, from a list of three proposed by the H. Chamber of Senators, approved by two-thirds of votes.

ARTICLE 157. In accordance with the Political Constitution of the State, the Superintendent enjoys Court Case.

ARTICLE 158.- The acts issued by the officials of the Central Bank of Bolivia, the Superintendency of Banks and Financial Entities, the Superintendency of Pensions, Securities and Insurance and the Ministry of Finance, as well as by the Intervening Intendant and the Liquidator of FONVIS, in the exercise of their functions in application of the Law, regulations and resolutions, shall be immediately enforceable and shall enjoy the legal presumption of validity, with the burden of proof to the contrary corresponding to the one alleging its irregularity.

No personal, civil, or criminal action may be attempted against officials of the Central Bank of Bolivia, the Superintendency of Banks and Financial Entities, the Superintendency of Pensions, Securities and Insurance and the Ministry of Finance, as well as against the Intervening Intendant and the Liquidator of FONVIS, for the exercise of their functions provided by Law, without previously having obtained a judicial resolution declaring the nullity of the administrative act in which said official participated, and that this judicial resolution is final and not appealable. In the event that the nullity of said act is declared and the cause of nullity is the particular conduct of the official who issued or executed the act, the way shall be open to demand the corresponding disciplinary responsibility without prejudice to the corresponding criminal action.

The judges or courts shall not admit any personal demand against the officials cited in the previous paragraph, without the plaintiff previously.

The judges or courts shall not admit any personal demand against the officials cited in the previous paragraph, without the plaintiff or complainant previously accompanying judicial testimony

50 accrediting compliance with the provisions of the previous paragraph. If the judge or court does not comply with the provisions of this paragraph, the authority of the institution in which the official exercises their functions shall pass the proceedings to the Public Ministry so that it immediately initiates an action of prevarication.

The public institution shall assume at its cost the defense of the officials or former officials sued for acts proper to their functions. The institution shall have the right to repeat against the official in the event that they are found personally responsible for the illegality.

Note: Article incorporated by article 14 of Law No. 2297 of 20 December 2001.

ARTICLE 159.- The annual budget of the Superintendency shall be covered by the entities subject to its competence, including the Central Bank of Bolivia, through assessments in an annual amount not greater than half per thousand for the Central Bank of Bolivia and one per thousand (1/00) for the other financial entities, applicable on the total of their assets and contingent operations.

Note: Paragraph modified by article 69 of Law No. 1732 of 29 November 1996.

The Superintendency shall not receive economic support from the General Treasury of the Nation.

Note: According to article 26 of Law No. 1670 of 31 October 1995, the BCB's quota to the Superintendency of Banks and Financial Entities shall be established annually by Supreme Resolution.

ARTICLE 160.- Note: Article repealed by article 69 of Law No. 1732 of 29 November 1996 TRANSITORY PROVISIONS ARTICLE 161.- The financial entities subject to the provisions of this Law shall adapt their statutes and other incorporation documents, insofar as relevant to the provisions of this Law, within one year from the date of its publication.

ARTICLE 162.- The financial entities whose paid-in capital is less than the minimum required, for the purposes of the provisions of article 47 of this Law, shall complete said capital within six (6) months from the publication of this Law, in two (2) quarterly installments proportional to the difference.

ARTICLE 163.- The Central Bank of Bolivia shall gradually adapt the legal reserve regime established in this Law, within a period no greater than one (1) year.

ARTICLE 164.- Note: Article repealed by article 127 of Law 1834 of 31 March 1998.

FINAL PROVISIONS ARTICLE 165.- The Superintendency of Banks and Financial Entities, established in Article 152, replaces, for all legal purposes, the Superintendency of Banks, created by the General Banking Law of 1928.

All acts and resolutions of the Superintendency of Banks, until it assumes the functions, attributions and the new denomination of Superintendency of Banks and Financial Entities, established in this Law, shall be carried out with full authority and legal validity.

ARTICLE 166.- This Law is of preferential application, for the regulation of the activities of the institutions and financial entities that are subject to its field of application.

51 ARTICLE 167.- For all legal purposes, the “competent administrative authority of control and supervision” referred to in the Commercial Code, is the Superintendency.

ARTICLE 168.- The following are repealed:

1. The General Banking Law of 11 July 1928;

2. The Decree of 15 January 1931 on General Deposit Warehouses; and

3. Supreme Decree No. 22734 of 28 February 1991, regarding Banking Houses.

ARTICLE 169.- Article 25 of Law No. 1178 of 20 July 1990 and Article

26 of Supreme Decree 23261 of 15 September 1992 and all legal provisions contrary to this Law are repealed.