Regulatory Alerts2017-09-19 | CD-SIBOIF-1016-3-SEP19-2017Added · Updated
Norm on Reform of Article 4 of the Capital Adequacy Standard
The Board of Directors of the Superintendence of Banks and Other Financial Institutions amended Article 4, subsection H of the Norm on Capital Adequacy to include the Anti-Cyclical Provision Fund within secondary capital. This change allows supervised financial institutions to count voluntary generic provisions up to 1.25% of credit risk-weighted assets and the newly constituted anti-cyclical provision fund toward their capital adequacy measurements. The norm entered into force upon notification on September 19, 2017.
Page 1 of 2 RESOLUTION NO. CD-SIBOIF-1016-3-SEP19-2017 Dated September 19, 2017 NORM ON REFORM OF ARTICLE 4 OF THE NORM ON CAPITAL ADEQUACY
The Board of Directors of the Superintendence of Banks and Other Financial Institutions,
CONSIDERING
I
That on October 27, 2010, the Norm on Capital Adequacy, contained in Resolution No. CD-SIBOIF-651-1-OCTU27-2010, published in La Gaceta, Official Journal No. 18, of January 28, 2011, was approved, which aims to regulate matters concerning the components of the capital calculation base, the required minimum capital, credit risk assets, and notional assets for exchange rate risk of supervised financial institutions.
II
That on September 19, 2017, the Norm on the Constitution of Anti-Cyclical Provisions, contained in Resolution No. CD-SIBOIF-1016-1-SEP19-2017, was approved, whose object is to mitigate the macroprudential risk of credit, by establishing additional anti-cyclical provisions to those referred to in the Norm on Credit Risk Management, to strengthen the stability of the financial system.
III
That the formation of the fund must not affect the normal growth of credit of financial institutions and therefore it is necessary to include this fund within the secondary capital, for the purposes of measuring adequacy.
In exercise of its powers,
RESOLVES
CD-SIBOIF-1016-3-SEP19-2017
To issue the following:
NORM ON REFORM OF ARTICLE 4 OF THE NORM ON CAPITAL ADEQUACY
Page 2 of 2
FIRST: Article 4, subsection H, of the Norm on Capital Adequacy contained in Resolution No. CD-SIBOIF-651-1-OCTU27-2010, of October 27, 2010, published in La Gaceta, Official Journal No. 18, of January 28, 2011, and its reforms, is hereby amended, which shall read as follows:
"Art. 4 Components of Secondary Capital.- Secondary capital shall be composed of the following: …… H. Generic Provisions: a. Voluntary generic provisions: Refers to credit provisions constituted by the financial institution voluntarily to cover unidentified losses. For the purposes of calculating secondary capital, these generic provisions may not exceed 1.25% of the total of assets weighted by credit risk. b. Anti-Cyclical Provision Fund: Refers to the anti-cyclical provision fund constituted by the financial institution, in accordance with the Norm on the Constitution of Anti-Cyclical Provisions. ….."
SECOND: This norm shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Journal. (f) Ovidio R. (f) V. Urcuyo (f) Gabriel Pasos Lacayo (f) Fausto Reyes (f) illegible (Silvio Moisés Casco Marenco) (f) illegible (Freddy José Blandón Argeñal) (f) illegible (Edelberto Zelaya Castillo) Ad Hoc Secretary.
URIEL CERNA BARQUERO Secretary of the Board of Directors SIBOIF