Norm on the Determination of the Risk Level of Institutions in the Deposit Guarantee System

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Resolution No. CD-SIBOIF-550-3-SEP3-2008
Dated September 3, 2008

NORM ON THE DETERMINATION OF THE RISK LEVEL OF INSTITUTIONS IN THE DEPOSIT GUARANTEE SYSTEM

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

CONSIDERING

I
That Article 18 of Law No. 551, Law of the Deposit Guarantee System, empowers the Board of Directors of the Superintendence of Banks and Other Financial Institutions to determine by general regulation the risk level of each financial institution of the Deposit Guarantee System, for the calculation of the premiums each institution must pay;

II
That risk rating agencies play an auxiliary role in banking supervision, through the evaluation of the risk level of each institution based on international best practices in supervision;

III
That Article 40, numeral 9, of Law No. 561, General Law of Banks, Non-Banking Financial Institutions and Financial Groups, establishes that among the policies that regulate the corporate governance of financial institutions adequate information flows must be included, both internal and for the public;

IV
That numeral 7 of Article 10 of Law 316, Law of the Superintendence of Banks and Other Financial Institutions, reformed by Law 552 Law of Reforms to the aforementioned Law 316, establishes that it corresponds to the Board of Directors of the Superintendence the power to regulate all matters related to risk rating agencies;

In exercise of its powers,
HAS ISSUED

The following:

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NORM ON THE DETERMINATION OF THE RISK LEVEL OF INSTITUTIONS IN THE DEPOSIT GUARANTEE SYSTEM Resolution No. CD-SIBOIF-550-3-SEP3-2008

Art. 1 Concepts.-
1 For the purposes of application of the provisions contained in this regulation, the terms indicated in this article, both in uppercase and lowercase, singular or plural, shall have the following meanings:
a) Rating Agency: Internationally recognized risk rating agencies, as well as other foreign risk rating agencies registered in the Register of the Superintendence. b) Register: The Register of Risk Rating Companies of the Superintendence. c) Superintendence: Superintendence of Banks and Other Financial Institutions.

Art. 2 Purpose.- The purpose of this regulation is to establish the criteria for determining the risk level of each financial institution of the Deposit Guarantee System for the effects established in Article 18 of Law No. 551, Law of the Deposit Guarantee System.

Art. 3 Scope.- The provisions of this regulation are applicable to the institutions of the Deposit Guarantee System supervised by the Superintendence.

Art. 4 Selection of rating agencies.- Each institution that is part of the Deposit Guarantee System must be rated by a rating agency.

Art. 5 Rating Criteria.- The rating criteria for rating agencies shall be those contained in Annex 1, Equivalence Table, which is an integral part of this regulation. Likewise, the Superintendant is authorized to modify the information contained in Annex 1, to the extent that its application so requires.

Art. 6 Current Rating.- The current rating shall be the one available on the Website of the respective rating agency. For these purposes, the rating must be available to the public on the Website of the respective 1 Art. 1, reformed on April 24, 2018 - Resolution CD-SIBOIF-1053-2-ABRI24-2018

3 rating agency, as well as on the Website of the rated financial institution, on a permanent basis.

Art. 7 Repeal.- The Norm on the Determination of the Risk Level of Institutions in the Deposit Guarantee System, contained in Resolution No. CD-SIBOIF-461-1-ENE16-2007, published in La Gaceta, Official Journal No. 40 of February 26, 2007, is hereby repealed.

Art. 8 Effectiveness.- This regulation shall enter into force upon its notification, without prejudice to its publication in La Gaceta, Official Journal.

Annex 1 2
EQUIVALENCE TABLE

The risk rating of the financial institution must be made without consideration of country risk or sovereign risk of the Central Government of the country, i.e., a local rating. To determine the risk category, the long-term issuer rating shall be used according to the following equivalence table:

Rating Agencies	Equivalence of Risk Categories
	Category 1; Low Risk	Category 2; Normal Risk	Category 3; Medium Risk	Category 4; High Risk
Fitch IBCA	Between; AAA and AA-	Between; A+ and BBB+	Between; BBB and BBB-	Between; BB+ or lower
Moody's Investor Services	Aaa and Aa3	A1 and Baa1	Baa2 and Baa3	Ba1 or Lower
Standard & Poor's	AAA and AA-	A+ and BBB+	BBB and BBB-	BB+ or Lower
Dominion Bond Rating	AAA and AA-	A+ and BBB+	BBB and BBB-	BB+ or Lower
Centromericana Risk Rating Company, S.A. (Moody's Local)	AAA and AA-	A+ and BBB+	BBB and BBB-	BB+ or Lower
Pacific Credit Rating, S.A. de C.V.	AAA and AA-	A+ and BBB+	BBB and BBB-	BB+ or Lower
Kroll Bond Rating Agency, Inc.	AAA and AA-	A+ and BBB+	BBB and BBB-	BB+ or Lower

2 Annex 1 reformed on March 5, 2025 - Resolution CDMF-VII-5-25
Annex 1 reformed on April 24, 2018 - Resolution CD-SIBOIF-1053-2-ABRI24-2018
Annex 1 reformed on July 16, 2015, by Resolution No. SIB-OIF-XXIII-254-2015.

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The Superintendant may update the above table in case of new authorized and registered risk rating companies in the register that for these purposes the Superintendence keeps, establishing the link between the rating scale of the company and the corresponding risk category. Likewise, it may update it when new internationally recognized risk rating agencies are determined, or in case such entities modify their risk rating nomenclature; which it will inform the Monetary and Financial Board prior to the notification by circular it makes to financial institutions.

(f) Antenor Rosales B. (f) V. Urcuyo V (f) Gabriel Pasos Lacayo (f) A. Cuadra García (f) Jessica M H. Ad Hoc Secretary.

URIEL CERNA BARQUERO
Secretary of the Board of Directors SIBOIF