Resolution No. CD-SIBOIF-610-2-ENE13-2010
Dated 2010

NORM AMENDING ARTICLES 23 AND 27 OF THE NORM ON CREDIT RISK MANAGEMENT

The Board of Directors of the Superintendency of Banks and Other Financial Institutions, after deliberations on the matter,

SOLE CONSIDERATION

Whereas, based on the authority granted to it by Article 3, items 3 and 13, and Article 10, item 7, of Law 316, Law of the Superintendency of Banks and Other Financial Institutions, and its amendments contained in Law 552, Law of Amendments to the aforementioned Law 316;

In the exercise of its powers,

HAS ISSUED

The following,

CD-SIBOIF-610-2-ENE13-2010 NORM AMENDING ARTICLES 23 AND 27 OF THE NORM ON CREDIT RISK MANAGEMENT

First: Articles 23 and 27 of the Norm on Credit Risk Management, contained in Resolution No. CD-SIBOIF-547-1-AGOST20-2008, dated 20 August 2008, are hereby amended and shall read as follows:

Art. 23 Requirements for Collateral.- All collateral eligible as risk mitigants must meet the following requirements:

a) Enforceable, meaning that they are duly constituted.

b) Marketable, meaning that a market exists that facilitates their prompt realization.

c) Appraisable, meaning susceptible to measurement and valuation. Such appraisal must be carried out in accordance with the provisions of the regulations governing the matter of appraisers who provide services to institutions of the Financial System.

In the case of mortgage collateral for housing credits granted in national or foreign currency for amounts equal to or less than the equivalent of twenty thousand dollars (US$20.000.00) that are located in the same urbanization or subdivision and have house models with identical physical characteristics (design, physical structure, built area, quality of materials, among others), the appraisal carried out on the model house may be accepted as the initial appraisal for all houses. For subsequent valuations that must be carried out in accordance with the periodicity established in Article 27 of this Norm, the aforementioned appraisal shall not apply; instead, a new appraisal must be carried out for each house.

d) Transferable at reasonable costs.

e) Stable in value, meaning that the minimum value of the collateral is maintained over time, and

f) Insured in the event that their own nature so requires.

Art. 27 Periodicity of Valuations.- The financial institution shall carry out valuations of its liquid collateral at least once a month. The supporting documents, such as valuations and appraisals, in addition to the evaluations of the financial institution that support the recorded or booked amounts, shall be kept at the disposal of the Superintendent.

In the case of mortgage collateral, valuations shall be carried out at least every three (3) years, except for mortgage collateral for housing credits granted in national or foreign currency for amounts equal to or less than the equivalent of twenty thousand dollars (US$20.000.00) that are located in the same urbanization or subdivision and have house models with identical physical characteristics (design, physical structure, built area, quality of materials, among others), for which valuations shall be carried out at least every five (5) years.

A new valuation shall not be required when the secured credit is classified in categories "A" or "B", provided that the principal plus interest balance of said credit has been reduced by a percentage equal to or greater than fifty percent (50%), or the market realization value of the asset constituting the collateral covers three (3) or more times the amount owed.

Notwithstanding the foregoing, the financial institution shall carry out new valuations when the following situations occur:

a) Adverse market conditions and/or price declines;

b) Natural disasters affecting the collateralized assets; or

c) The credit secured by mortgage collateral over real property is subject to restructuring.

Second: The Norm on Provision for Housing Credits for Amounts Equal to or Less than the Equivalent in National Currency of Twenty Thousand United States of America Dollars, contained in Resolution No. CD-SIBOIF-498-2-SEP5-2007 of 05 September 2007, is hereby repealed.

Third: This Norm shall enter into force upon its notification, without prejudice to its publication in the Official Gazette, La Gaceta. (f) A. Rosales B. (f) V. Urcuyo V. (f) Gabriel Pasos Lacayo (f) Fausto Reyes (f) illegible (Silvio M. Casco Marenco) (f) A. Morgan Pérez. Ad Hoc Secretary.

URIEL CERNA BARQUERO
Secretary of the Board of Directors of SIBOIF