Norm on Reforming Articles 1 and 3 of the Standard for Establishing Special Conditions for Debt Renegotiation

Resolution No. CD-SIBOIF-1061-1-JUNIO26-2018 Dated June 26, 2018 NORM ON REFORMING ARTICLES 1 AND 3 OF THE STANDARD FOR THE ESTABLISHMENT OF SPECIAL CONDITIONS FOR THE RENEGOTIATION OF DEBTS

The Board of Directors of the Superintendence of Banks and Other Financial Institutions,

CONSIDERING

I

That in accordance with what is established in Article 10, numeral 1) of Law No. 316, Law of the Superintendence of Banks and Other Financial Institutions, published in La Gaceta, Official Gazette No. 196, of October 14, 1999, and its amendments, it corresponds to the Board of Directors of the Superintendence of Banks and Other Financial Institutions to issue general norms to strengthen and preserve the security and confidence of the public in institutions under the supervision, inspection, surveillance, and audit of the Superintendence.

II

That on May 29, 2018, the Standard for the Establishment of Special Conditions for the Renegotiation of Debts was approved, contained in Resolution No. CD-SIBOIF-1057-1- MAY29-2018.

III

That it is necessary to clarify that the provisions of the aforementioned standard are applicable only to housing mortgages, microcredit, commercial loans, and consumer loans, with the exception of credit cards and extra financing.

IV

That according to the considerations previously stated and based on the power established in Article 3, numerals 3 and 13, and Article 10, numeral 7, of the aforementioned Law 316, Law of the Superintendence of Banks and Other Financial Institutions, and its amendments.

In exercise of its powers,

HAS ISSUED

The following,

Resolution No. CD-SIBOIF-1061-1-JUNIO26-2018 NORM ON REFORMING ARTICLES 1 AND 3 OF THE STANDARD FOR THE ESTABLISHMENT OF SPECIAL CONDITIONS FOR THE RENEGOTIATION OF DEBTS

FIRST: Articles 1 and 3 of the Standard for the Establishment of Special Conditions for the Renegotiation of Debts, contained in Resolution No. CD-SIBOIF-1057-1- MAY29-2018, dated May 29, 2018, are hereby amended, which shall read as follows:

“Article 1. Purpose.- This standard aims to establish special temporary relief conditions for debtors, allowing them to adequately meet their obligations in light of the potential or actual deterioration of their payment capacity, as a result of the events that have occurred in the country since April of the current year.

Article 3. Special credit conditions.- Financial institutions may modify the conditions originally agreed upon in credit contracts or perform debt consolidations, for housing mortgages, microcredit, commercial loans, and consumer loans, excepting in the latter case credit cards and extra financing, without these adjustments being considered as a restructuring under the terms of Article 36 of the regulation governing credit risk management, for those debtors whose loans as of March 31, 2018, have a risk rating of “A” or “B” and are in active status, and those granted within the period of the month of April 2018. These modifications may be made upon formal request by the debtor. These loans shall have the following characteristics:

a) They shall be granted only to debtors who have demonstrated good payment behavior and who show evidence of having been directly or indirectly affected by the events that have occurred in the country since April of the current year.

b) The new conditions must adhere to criteria of financial viability, taking into account the risk analysis and the debtor's payment capacity.

c) Loans modified in accordance with the provisions of this article will retain the same risk category and accounting record they had as of March 31, 2018, and those granted within the period of the month of April 2018. However, if the debtor fails to comply with the new agreed conditions, the financial institution must reclassify the loan in accordance with the provisions of the regulation governing credit risk management, potentially improving its credit classification once the conditions indicated in the aforementioned regulatory framework are met, depending on the type of loan.

d) Each financial institution must determine the requirements for applying the conditions established in this standard, demonstrating compliance with what is set forth in letter a) of this article, and that as of March 31, 2018, it had the risk rating referred to in the first paragraph of this article, and those granted within the period of the month of April 2018.

For the purposes of this standard, debts from credit cards and extra financing shall not be subject to restructuring, consolidations, extensions, or refinancing.”

SECOND: It is authorized that this resolution be fully incorporated into the Standard for the Establishment of Special Conditions for the Renegotiation of Debts, contained in Resolution No. CD-SIBOIF-1057-1-MAY29-2018, dated May 29, 2018.

THIRD: This standard shall enter into force upon its notification.