Norm Reforming Article 8 of the Regulation on Deposit and Investment Limits

Resolution No. CD-SIBOIF-1345-1-NOV17-2022
Dated November 17, 2022
REGULATION REFORMING ARTICLE 8 OF THE REGULATION ON DEPOSIT AND INVESTMENT LIMITS

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

CONSIDERING

I
That Article 10, item 11, of Law No. 316, "Law of the Superintendence of Banks and Other Financial Institutions," and Articles 53, 54, and 57, item 1, of Law No. 561, "General Law of Banks, Non-Bank Financial Institutions, and Financial Groups," both laws contained in Law No. 974, "Law of the Nicaraguan Legal Digest on Banking and Finance Matters," published in La Gaceta, Official Gazette No. 164, on August 27, 2018, and its updates, empower the Board of Directors of the Superintendence of Banks and Other Financial Institutions to issue regulations related to investments and deposits, as well as to establish limits for this type of operation, both within the country and abroad, for supervised financial institutions.

II
That it is necessary to reform Article 8 of the Regulation on Deposit and Investment Limits, contained in Resolution No. CD-SIBOIF-650-2-OCT20-2010, dated October 20, 2010, published in La Gaceta, Official Gazette No. 2, on January 6, 2011, and its amendments, by establishing a global limit on investments in foreign instruments, in order to mitigate concentration risks in the portfolio and diversify the placement of resources.

In exercise of its powers,

HAS ISSUED

The following,

No. CD-SIBOIF-1345-1-NOV17-2022
REGULATION REFORMING ARTICLE 8 OF THE REGULATION ON DEPOSIT AND INVESTMENT LIMITS

FIRST: Article 8 of the Regulation on Deposit and Investment Limits contained in Resolution No. CD-SIBOIF-650-2-OCT20-2010, dated October 20, 2010, published in La Gaceta, Official Gazette No. 2, on January 6, 2011, and its amendments, is hereby reformed, which shall read as follows:

"Art. 8. Limits per depositor or issuer and global limit.- In operations carried out in accordance with Articles 5, 6, and 7 of this regulation, financial institutions acting as depositors and investors shall be governed by the following limits:

I. Limits per depositor or issuer:
a) In serial negotiable securities issued in national or foreign currency by the Central Government or the Central Bank of Nicaragua, as indicated in Article 5 of this regulation, without limit. b) In demand deposits (checking and savings accounts) or time deposits, as well as in serial negotiable securities indicated in item a) of Article 6 of this regulation, up to thirty percent (30%) of the calculation base of the investing or depositing institution, per issuer or depositor. c) In investments in public debt securities referred to in item b) of Article 6 of this regulation, up to ten percent (10%) of the calculation base of the investing institution, per issuer. d) In checking, savings, MMDA/MMSA, and time deposits of up to seven (7) days in banks with first-rate international rating, indicated in items 1), 2), and 3) of item a) of Article 7 of this regulation, according to their operational and/or treasury needs. In those cases where the thirty percent (30%) limit of the calculation base of the capital of the depositing institution is exceeded per depositor in such accounts, such operations must be duly justified at the discretion of the Superintendent. e) In non-negotiable time deposit certificates for periods greater than seven (7) days and not exceeding one (1) year in banks with first-rate international rating, indicated in item 4) of item a) of Article 7 of this regulation, up to thirty percent (30%) of the calculation base of the investing institution, per depositor. f) In Debt Instruments and/or Negotiable Deposit Certificates serially issued in banks with first-rate international rating, which are traded on the stock exchange or regulated market of the corresponding country, referred to in Article 7, item a), item 5), up to fifteen percent (15%) of the calculation base of the investing or depositing institution, per issuer or depositor. g) In checking accounts maintained in unranked banks referred to in Article 7, item b), up to ten percent (10%) of the calculation base of the depositing institution, per depositor. Exceeding the aforementioned limit shall not be considered a breach when it is exceeded by deposits made by persons or entities unrelated to the institution, provided that such excess is regularized within a period not exceeding three (3) business days, duly justified in communication sent to the Superintendent.

h) In checking accounts maintained in banks with first-rate local rating, referred to in Article 7, item c) of this regulation, up to fifteen percent (15%) of the calculation base of the depositing institution, per depositor.
Exceeding the aforementioned limit shall not be considered a breach when it is exceeded by deposits made by persons or entities unrelated to the institution, provided that such excess is regularized within a period not exceeding three (3) business days, duly justified in communication sent to the Superintendent.

i) In Money Market accounts maintained at the stock exchange positions indicated in item d), of Article 7 of this regulation, up to fifteen percent (15%) of the calculation base of the depositing institution, per depositor.
Exceeding the aforementioned limit shall not be considered a breach when it is exceeded by transitory operations connected to pending investments, duly justified in communication sent to the Superintendent.

j) In serial negotiable debt securities issued or guaranteed by the Department of the Treasury or by institutions or companies of the Federal Government of the United States of America, indicated in Article 7, item e), item 1), of this regulation, up to fifty percent (50%) of the calculation base of the investing institution, per issuer. k) In serial negotiable debt securities issued by Multilateral Credit Organizations (IDB, World Bank, CABEI) of which the country is a member, indicated in Article 7, item e), item 2), of this regulation, up to fifty percent (50%) of the calculation base of the investing institution, per issuer. l) In serial negotiable debt securities issued by Central Banks and Central Governments, indicated in Article 7, item e), item 3) of this regulation, up to fifteen percent (15%) of the calculation base of the investing institution, per issuer.

II. Global limit: The sum of operations for time deposits and securities established in items e), f), j), k), and l) of this article, shall have a maximum global limit of fifty percent (50%) of the capital adequacy base of the depositing and/or investing institution.

SECOND: Time deposits and securities, both from abroad, that are in effect on the date of notification of this resolution, which exceed the limits per depositor or issuer and the global limit established in Article 8 subject to this reform, must be canceled no later than their maturity date, in such a way that the exceeded amount decreases in function of such maturities, until they comply with the limits per depositor or issuer and the global limit, established in said article. For the fulfillment of the above, the depositing and/or investing institution must send to the Superintendent, no later than five (5) business days counted from the entry into force of this resolution, the list of time deposits and securities that exceed the global limit established in Article 8 subject to this reform. For this purpose, the fields and definitions contained in the Transactional Manual of the Annex of Investments must be used.

THIRD: This regulation shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Gazette.

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

SAÚL CASTELLÓN TÓRREZ
Ad Hoc Secretary of the Board of Directors SIBOIF