Resolution No. CD-SIBOIF-530-1-ABR16-2008
Dated 16 April 2008

REFORM TO THE STANDARD ON THE REQUIREMENTS FOR THE INCORPORATION OF BANKS, FINANCIAL COMPANIES, BRANCHES OF FOREIGN BANKS AND REPRESENTATIVE OFFICES

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

WHEREAS

I

That it is necessary to amend the provisions of article 3, literal d, numeral 2, subparagraph v of the Standard on the Requirements for the Incorporation of Banks, Financial Companies, Branches of Foreign Banks and Representative Offices (Standard), in order to establish that the requirement to submit the report of the independent auditors on the audited financial statements, corresponding to the two accounting years prior to the date of the application, shall be applicable to those legal entities that have two or more years of existence; it being clarified that those with a shorter period of existence may submit the financial information they have at the time of the application;

II

That it is necessary to amend the provisions of article 4 of the Standard, in order to establish that the Superintendent may partially or totally exempt, from the information requirements necessary to authorize the incorporation of a national bank or financial company, financial institutions with a first-rate international rating made by a risk rating agency, or supervised by bodies with which this Superintendency has signed information exchange or cooperation agreements, and non-profit organizations and/or foundations dedicated internationally to development;

III

That it is necessary to amend the provisions of literal e. of article 11 of the Standard, in order to keep updated, by reason of regulations issued subsequently, the requirements to be met during the stage of authorization to commence operations of the institutions referred to in the Standard, as well as to include the power of the Superintendent to verify, prior to the expiration of the 180-day term referred to in article 11 above, the degree of compliance with said requirements, in order to expedite the authorization process;

IV That numeral 2 of article 10 of Law 316, Law of the Superintendency of Banks and Other Financial Institutions, published in La Gaceta Diario Oficial No. 196 of 14 October 1999, reformed by Law 552, Law of Reforms to Law 316, Law of the Superintendency of Banks and Other Financial Institutions, published in La Gaceta, Diario Oficial No. 169 of 31 August 2005, establishes that it corresponds to the Board of Directors of the Superintendency of Banks and Other Financial Institutions to issue general rules that promote adequate, agile, modern and practical supervision over the institutions subject to the supervision, inspection, monitoring and oversight of the Superintendency.

In use of its powers,

HAS ISSUED

The following:

REFORM TO THE STANDARD ON THE REQUIREMENTS FOR THE INCORPORATION OF BANKS, FINANCIAL COMPANIES, BRANCHES OF FOREIGN BANKS AND REPRESENTATIVE OFFICES

Resolution No. CD-SIBOIF-530-1-ABR16-2008

FIRST.- Amend articles 3, 4 and 11 of the Standard on the Requirements for the Incorporation of Banks, Financial Companies, Branches of Foreign Banks and Representative Offices, contained in Resolution No. CD-SIBOIF-473-1-ABR11-2007 of 11 April 2007, published in La Gaceta, Diario Oficial No. 106 of 06 June 2007, which shall read as follows:

Art. 3. Application to the Superintendency of Banks.- Persons who intend to establish a bank must submit an application to the Superintendency, containing the names and surnames or trade name, domicile and profession of all the organizers, accompanied by the following documents:

a. The draft of the deed of incorporation and its bylaws.

b. Economic-financial feasibility study, which must contain the information required in Annex 1 of this standard, which is an integral part thereof.

c. Minute showing deposit in the current account of the Superintendency, for value of 1% of the amount of the minimum capital, for the processing of the application. Once it has commenced operations, said deposit shall be returned to the promoters. In case the application is denied, 10%

of the amount of the deposit shall accrue in favor of the Treasury of the Republic: the balance shall be returned to the interested parties. In case of withdrawal, 50% of the deposit shall accrue in favor of the Treasury. For the purposes of the provisions of this literal, the account and name of the banking entity where the deposit shall be made must be requested from the Superintendency.

d. In order to verify compliance with the provisions of numerals 3, 4, 6 and 7 of article 4 of the General Banking Law, each of the Shareholders of 5% of the proposed institution, as well as the members of the board of directors and principal management team (principal executive, general manager, area vice-presidents and internal auditor), must submit, as indicated, the following information and documentation:

1. For natural persons:

i. Name, age, occupation, nationality and domicile.

ii. Curriculum documented with the information required in Annex 2, which becomes an integral part of this standard.

iii. Financial statements and statement of income and expenses, with the information required in Annex 3, which becomes an integral part of this standard, signed by the interested party and certified by an authorized public accountant or equivalent professional in the country where it is issued. The figures must be expressed in book value in accordance with accounting standards. This information shall only be required for the Shareholders of 5%.

iv. Photocopy of the identity card on both sides for nationals, or of the identity card for residents or of the passport in the case of foreigners, certified by a notary public in accordance with the applicable law.

v. Single Taxpayer Registry (RUC) number. In the case of foreigners not domiciled in the country, they must present the equivalent used in the country where they pay taxes.

vi. Certificate of judicial and/or police background, issued by the corresponding national authorities in the case of persons domiciled in Nicaragua, and by the competent foreign body, when dealing with persons not domiciled in Nicaragua or natural persons residing in Nicaragua who in the last 15 years have been residents abroad.

vii. A minimum of 5 recent personal, banking or commercial references as of the date of the application (national or foreign).

viii. Declaration before a notary public of not being involved in any of the situations contemplated in numerals 1, 5, 6, 7 and 8 of article 29 of the General Banking Law. For Directors: declaration before a notary public of not being involved in the impediments of the aforementioned article 29.

ix. Detailed breakdown of the related natural and legal persons as well as those that make up their unit of interest, based on the criteria established in article 55 of the General Banking Law and the corresponding Norm.

2. For legal persons:

i. Notarially certified copy of the testimony of the public deed of incorporation of the company, bylaws and their amendments, if any. In the case of foreign legal persons, the equivalent documents.

ii. A minimum of five recent banking or commercial references as of the date of the application (national or foreign).

iii. Names of the members of the Board of Directors, as well as the curriculum vitae of each of its members, which shall be submitted in accordance with Annex 2.

iv. Notarial certification in original of the minutes recording the authorization granted by the corresponding corporate body, to participate as organizer and/or shareholder of the new banking institution and the amount of the investment destined for that purpose.

v. Copy of the report of the independent auditors on the audited financial statements, corresponding to the two accounting years prior to the date of the application, as the case may be.

vi. List and percentage of participation of the 5% Shareholders natural persons, ultimate owners of the shares, in a succession of legal persons, of the legal person shareholder promoting the bank in formation. In order to determine whether the natural persons indicated here are 5% Shareholders, the calculation methodology established in Annex 4, which is an integral part of this norm, must be followed.

The natural persons who, according to the aforementioned calculation methodology, are 5% Shareholders must comply with the information requirements established in numeral 1 of this literal d.

The Superintendent is empowered to require the information it deems necessary about the legal persons in which the 5% Shareholders natural persons participate, such as members of boards of directors, activity to which they are dedicated, incorporation and registration data, among others.

Likewise, a scheme must be submitted reflecting the shareholding structure of the 5% Shareholders, reflecting whether this percentage of participation is individually or jointly with their related parties, indicating the full names of the natural or legal persons contained in this organizational chart.

e. For all shareholders, documentary evidence of the lawful origin of the patrimony to be invested in the new institution. At a minimum, said documentation must include:

1. Information on the bank accounts from which the money comes.

2. Information on the origin of the money deposited in said accounts.

3. Information on the origin of the patrimony (information on the activities from which the patrimony comes such as businesses, inheritances, donations, etc.) and evidence that the money comes from them.

The Superintendent is empowered to require any other information it deems necessary in order to comply with the purpose of this norm and with the legal mandate to safeguard the interests of depositors and the strength of the financial system.

Art. 4. Exceptions.- The Superintendent may authorize exceptions to one, several or all of the requirements indicated in article 3, Chapter III, referring to the constitution of foreign branches, and to Chapter VI, referring to the representative offices of foreign banks, all of this norm, in the following cases:

a. When the partner(s) legal person(s) is a public law institution with capacity for such purpose.

b. When the partner(s) legal person(s) are bilateral or multilateral international organizations or organizations and/or non-profit institutions dedicated internationally to development.

c. When the partner(s) legal person(s) are financial institutions with first-rate international rating made by a risk rating agency or supervised by bodies with which this Superintendency has signed information exchange or cooperation agreements.

d. When the partner(s) legal person(s) lists its shares on a stock exchange or regulated market.

All the information required here must be supported by the interested party, to the satisfaction of the Superintendent.

Likewise, the Superintendent may authorize exceptions to the presentation of some or all of the information requirements indicated above, when such information, having been required by other prudential norms, is up to date in the files of this Superintendency.

Art. 11. Notice of commencement of operations.- In accordance with the provisions of article 7 of the General Banking Law, prior to the commencement of operations of a national bank or a branch of a foreign bank in the country, the Superintendent shall verify compliance with the following aspects:

a. Minimum paid-in capital in cash. In the case of branches of foreign banks, allocation and establishment of capital equal to the minimum established by the Law. In both cases, 80% of this in a demand deposit at the Central Bank of Nicaragua.

b. Certified copy of the deed of incorporation and its bylaws with the corresponding registration notes in the Public Registry.

c. Opening balance sheet.

d. Certification of the appointments of the directors for the first period, of the manager or principal executive of the bank and of the internal auditor.

e. Verification by the Superintendent that the institution has adequate physical facilities and technological platform, as well as the necessary contracts, insurance, manuals and regulations, approved by the board of directors. For the foregoing, interested parties must take into account the provisions of Annex 5 and the rules issued by the Board of Directors, such as those pertaining to credit, market, liquidity and operational risk management.

If the application for authorization to operate with evidence of compliance with the aforementioned requirements is not submitted within one hundred eighty (180) days from the notification of the resolution authorizing its incorporation, it shall be void, and the amount of the deposit referred to in article 2 of this regulation shall accrue to the Treasury of the Republic.

In order to expedite the authorization process, the Superintendent may require, 45 days before the expiration of the 180-day term referred to in the preceding paragraph, that interested parties submit a progress report on compliance with the requirements indicated in literal e. above.

SECOND.- With respect to the annexes contained in the Regulation on the Requirements for the Incorporation of Banks, Financial Companies, Branches of Foreign Banks and Representative Offices, contained in Resolution No. CD-SIBOIF-473-1-ABR11-2007, the following is established:

a. The annex referring to the “calculation methodology” becomes Annex 4, and consequently the numbering in the following annexes is shifted.

b. The annex entitled “minimum security measures that banks and financial institutions must comply with” remains in force, which by virtue of the provisions of the preceding literal becomes Annex 5.

c. The following annexes are repealed:

1. Number 5, referring to the “minimum requirements of the function and operating procedure manuals”, and

2. Number 6, referring to the “information requirements on computer equipment”.

THIRD.- This amendment shall enter into force upon its publication in La Gaceta, Official Gazette. (f) Antenor Rosales B. (f) V. Urcuyo V. (f) Gabriel Pasos Lacayo (f) Nelson Estrada S. (f) A. Cuadra G. (f) U. Cerna B. Secretary.

URIEL CERNA BARQUERO
Secretary Board of Directors SIBOIF