Norm Reforming Article 6 of the Standard on Bonus Payments in Financial Institutions

Resolution No. CD-SIBOIF-1262-3-AGOS3-2021
Dated August 3, 2021

STANDARD REFORMING ARTICLE 6 OF THE STANDARD ON BONUS PAYMENTS IN FINANCIAL INSTITUTIONS

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

CONSIDERING

I

That on November 24, 2010, the Board of Directors of the Superintendence of Banks and Other Financial Institutions approved the Standard on Bonus Payments in Financial Institutions, contained in Resolution No. CD-SIBOIF-655-2-NOV24-2010, dated November 24, 2010, published in La Gaceta, Official Journal No. 15, of January 25, 2011, with the aim of promoting prudential practices in the use of appropriate economic incentives that do not increase the risk profile of the institution.

II

That it is necessary to reform Article 6 of the Standard on Bonus Payments in Financial Institutions, in order to establish that the payment of bonuses may be suspended or restricted when the Superintendent authorizes the deferral or gradualness for the constitution of provisions.

III

That in accordance with the foregoing and based on the powers established in Article 3, numeral 13) and Article 10, numerals 1), 2) and 3) of Law No. 316, Law of the Superintendence of Banks and Other Financial Institutions, contained in the Nicaraguan Legal Digest of the Banking and Finance Matter, published in La Gaceta, Official Journal No. 164, of August 27, 2018, and its updates.

In exercise of its powers,

HAS ISSUED

The following,

CD-SIBOIF-1262-3-AGOS3-2021

STANDARD REFORMING ARTICLE 6 OF THE STANDARD ON BONUS PAYMENTS IN FINANCIAL INSTITUTIONS

FIRST: Article 6 of the Standard on Bonus Payments in Financial Institutions contained in Resolution No. CD-SIBOIF-655-2-NOV24-2010, of November 24, 2010, published in La Gaceta, Official Journal No. 15 of January 25, 2011, and its reforms, is hereby reformed, which shall read as follows:

"Art. 6. Restriction on the payment of bonuses. - The Superintendent, based on the knowledge obtained regarding the situation of a financial institution, whether through inspections or through the analysis of the documentation and information available, without prejudice to the corresponding sanctions, according to the materiality or gravity of the case, may suspend or restrict the payment of bonuses in the following cases:

a) When acts or operations are carried out without the authorization of the Superintendent, when so established by law or regulations, or without observing the conditions established therein.

b) When transactions with related parties are conducted under preferential conditions or without complying with the legal and regulatory provisions established for this type of operations; or when there are undisclosed transactions with related parties.

c) Lack of minimum information that, in accordance with the law and corresponding regulations, must be demanded from debtors, when such information has an impact on the determination of their payment capacity and/or the recoverability of the credit.

d) When the existence of practices that undermine the independence that must exist between the bodies responsible for auditing, internal control, compliance, and risk management with respect to the other corporate and business instances of a particular institution is confirmed.

e) When it is determined that the policies, practices, and procedures for granting, administering, and controlling credits, insurance, or securities intermediation do not comply with the applicable legal and regulatory provisions, according to the level of deficiencies found.

f) When, at the beginning of the on-site inspection visit, the information required in the opening letter is not available.

g) When the financial institution does not comply with the provisions of this standard.

h) When the financial institution is in a transitional regime regarding the constitution of provisions for any asset, that is, those for which the Superintendent has approved gradualness or deferral to create their provisions, whether resulting from their own calculations or from inspections.

i) When the financial institution has pending to register adjustments ordered by the Superintendent, or determined by themselves, whether these are interests to be sanitized or various accounts from the balance sheet.

j) When the opinion of external auditors regarding the audit performed at the end of the period includes qualifications that could affect the financial situation of the Institution.

k) When the provisions contained in laws, resolutions of the Board of Directors; as well as orders or instructions issued by the Superintendent; are infringed; or irregularities in the functioning of an institution are detected, or documents or reports are received from them that do not correspond to their true situation.

l) When other situations arise that, in the judgment of the Superintendent, warrant restricting the payment of bonuses, when, in the opinion of said official and as a prudential measure, such payment could harm the stability or solidity of the Institution."

SECOND: This standard shall enter into force from its publication in La Gaceta, Official Journal.

(F) Legible Magaly María Sáenz Ulloa (F) Illegible (Luis Ángel Montenegro E) (F) Illegible Fausto Reyes (F) Illegible (Silvio Moisés Casco Marenco) (F) Illegible (Ervin Antonio Vargas Pérez).

SAÚL CASTELLÓN TÓRREZ
Ad Hoc Secretary Board of Directors SIBOIF