Lima, 06 October 2005

S.B.S. Resolution No. 1535 -2005

The Superintendent of Banking, Insurance and
Private Administrators of Pension Funds:

WHEREAS:

That, article 215 of the General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance, Law No. 26702 and its amendments, hereinafter General Law, establishes the treatment of assets received in payment of debts;

That, subsequently, said provision has been regulated by SBS Circular No. B- 2075-2000, F- 0415 -2000, CM- 0262 -2000, CR- 0132 -2000, EAF- 0195 -2000 and EDPYME- 0071 -2000 of 22 June 2000 and its amendments;

That, by means of SBS Resolution No. 895-98 of 01 September 1998 and its amending norms, the Accounting Manual for Companies of the Financial System was approved, hereinafter Accounting Manual;

That, the Accounting Manual establishes the accounting treatment of foreclosed and recovered assets, indicating guidelines both for their recording, as well as for their presentation in the financial statements;

That, it is necessary to adapt the current treatment of foreclosed and recovered assets to international accounting standards, and at the same time maintain coherence with the prudential norms established in the General Law;

Having the opinion of the Deputy Superintendencies of Banking and Microfinance, Risks and Legal Advisory, as well as the Economic Studies Management; and,

In use of the attribution conferred by numerals 7 and 13 of article 349 of the General Law;

RESOLVES:

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Article One.- Approve the Regulation for the Treatment of Foreclosed and Recovered Assets and their Provisions, which forms an integral part of this Resolution.

Article Two.- In Chapter IV of the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions, approved by SBS Resolution No. 808-2003, replace numeral 8 and first paragraph of numeral 9.5, according to the texts presented below; as well as, eliminate paragraphs 4, 5 and 6 of numeral 9.5:

“ 8. Foreclosure of Assets in Payment of Debts The recording, accounting treatment and provisions of the assets that a company forecloses in payment of debts, shall be subject to the norms established by this Superintendency.”

“9.5 Recovered Assets “The assets recovered by contract resolution, must be incorporated into the assets of the leasing company from the physical possession. The recording, accounting treatment and provisions of the referred assets shall be subject to the norms established by this Superintendency.”

Article Three.- Amend the Accounting Manual, according to annex 1 attached to this norm.

Article Four.-1 Incorporate procedures No. 107

“Authorization for the transfer of foreclosed and recovered assets, as well as rights of trusts of dation in payment, of multiple operations companies and financial leasing companies considered in article 16 of the General Law, Banco de la Nación, Banco Agropecuario, COFIDE and FOGAPI” and No. 108 “Authorization for the transfer of foreclosed and recovered assets to the fixed assets of multiple operations companies and financial leasing companies considered in article 16 of the General Law, Banco de la Nación, Banco Agropecuario, COFIDE and FOGAPI” of the Single Text of Administrative Procedures – TUPA of the Superintendency of Banking and Insurance approved by SBS Resolution No. 131-2002, according to the texts attached to this Resolution. Likewise, update in the TUPA the legal base of procedure No. 33 “Extension for the holding of foreclosed and recovered assets by companies of the financial system”.

Article Five.- Repeal SBS Circulars No. B- 2075-2000, F- 0415 -2000, CM- 0262 -2000, CR- 0132 -2000, EAF- 0195 -2000 and EDPYME- 0071 -2000 of 22 June 2000, No. B-2096-2001, F-0435-2001, CM-0282-2001, CR-0151-2001, EAF-0203-2001, EDPYME-0085-2001 of 23 August 2001, No. B-2109-2002, F-0448-2002, CM-0295-2002, CR- 0164-2002, EAF-0207-2002, EDPYME-0093-2002 of 05 August 2002, and No. B-2142-2005, F- 0482-2005, CM-0329-2005, CR-0198-2005, EAF-0227-2005, EDPYME-0115-2005 of 04 January 2005.

Article Six.- This norm shall enter into force as of

[1] Article left without effect by SBS Resolution No. 3082-2011 of 11/03/2011.

SUPERINTENDENCY OF BANKING, INSURANCE AND AFP

of 1 October 2005, except for what is established in articles 10, 11 and 12 of the Regulation that shall enter into force as of the information for the month of January 2006.

Register, communicate and publish

JUAN JOSÉ MARTHANS LEÓN
Superintendent of Banking, Insurance and
Private Administrators of Pension Funds

REGULATION FOR THE TREATMENT OF FORECLOSED AND RECOVERED ASSETS, AND THEIR PROVISIONS

Article 1.- Scope

The provisions of this regulation apply to multiple operations companies and financial leasing companies, considered in article 16 of the General Law, as well as to Banco de la Nación, Banco Agropecuario, Corporación Financiera de Desarrollo (COFIDE) and the Fundación Fondo de Garantía para Préstamos a la Pequeña Industria (FOGAPI), hereinafter companies.

Article 2.- Definitions

For the application of this regulation the following definitions must be considered:

1. Foreclosed assets: assets that companies receive in dation in payment or foreclosure as total or partial payment of debts. Includes real estate foreclosed in reverse mortgage operations.2

2. Recovered assets: assets whose possession is recovered by companies as a consequence of the resolution of financial leasing contracts. These assets must be accounted for as realizable assets, from the recovery of physical possession.

3. Book cost of the goods: value assigned for accounting purposes to the awarded or recovered good. In the case of awarded goods, the value must be in accordance with what was agreed under the dation-in-payment contract or assigned in the judicial or extrajudicial award, and in no case may it be greater than the value of the debt being cancelled. In the case of recovered goods, the value must be the outstanding value of the debt or the net realizable value, whichever is lower.

4. Debt: principal, interest, expenses and other concepts derived from the obligational relationship of the debtors.

5. Days: calendar days.

6. Dation-in-payment trust: trust constituted with movable or immovable property by the debtor or a third party of a credit transaction for the purpose that the resources obtained from the sale of said goods, or failing that the goods themselves, be delivered to the creditor company. For the appointment of the trustee, the provisions of article 258 of the General Law must be considered.

7. Provision for impairment: provision constituted by the difference between the net realizable value of the awarded or recovered good and the net book value, in case the net book value is greater than the net realizable value.

8. Outstanding value of the debt: principal of the debt

9. Net book value: it is the book cost of the unsold goods less the provision for awarded and recovered goods.

10. Net realizable value: value determined following the guidelines established in numeral 3 of Chapter IV of the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions, approved by SBS Resolution No. 808-2003 and its amendments. In the case of immovable property, said value must be determined by an appraiser duly registered in the Registry of Appraisers (REPEV) of this Superintendency, reflected in its appraisal report, which must appropriately consider the sale of the good in the market less the additional expenses incurred for such purpose, which shall correspond to the immediate realizable value (VRI), and whose appraisal age must not be greater than one year.

[2] Literal modified by SBS Resolution No. 4838-2019 of 17/10/2019

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Article 3.- General Law

The provisions of article 215 of the General Law are applicable to the awarded and recovered goods referred to in the definitions of the preceding article.

Article 4.- Extension

Companies that have not sold or delivered in financial leasing the goods within the term of one (1) year may request the extension provided for in article 215 of the General Law at least fifteen (15) days before its expiration. Requests submitted without said advance notice shall be rejected. Authorization is granted by Resolution of this Superintendency published in the Official Gazette El Peruano.

In the case of immovable property, companies may request the extension, attaching to said request a copy of the summary of the latest appraisal report of the good, and must previously constitute, if applicable, the provision for impairment. If the net realizable value is greater than the net book value at said date, the company may not recognize the greater value for accounting purposes.

The term and extension provided for in article 215 of the General Law apply only to the first occasion on which a good is awarded or recovered.

Article 5.- Provisions for awarded and recovered goods

Provisions for awarded and recovered goods shall be constituted in accordance with the following guidelines:

1) Movable Goods

Immediately upon the initial registration of the awarded or recovered movable good, represented by the book cost of the goods, a minimum provision equivalent to twenty percent (20%) of said cost shall be required. If the net realizable value reflects that the good has been impaired by a percentage greater than 20%, the initial provision required shall be for the amount effectively impaired.

In the case of goods that do not have the extension referred to in article 4 of this Regulation and have not been sold or delivered in financial leasing within the term of one (1) year indicated in article 215 of the General Law, companies must complete the provision until reaching the equivalent of one hundred percent (100%) of the book cost of the unsold goods, at the expiration of said year.

If this Superintendency grants the extension provided for in article 215 of the General Law, they must complete the provision until reaching the equivalent of one hundred percent (100%) of the book cost of the unsold goods, at the expiration of said term.

For the purposes of constituting provisions, companies shall constitute monthly, from the first month of the award or recovery of the goods, a monthly provision equivalent to one-eighteenth (1/18) of the book cost of the goods less the initial provision indicated in the first paragraph. In the case of goods that do not have the extension indicated in article 215 of the General Law, companies must complete the provision until reaching the equivalent of one hundred percent (100%) of the award or recovery value of said goods less the provision for impairment, at the expiration of said year.

2) Immovable Property

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Immediately upon the initial registration of the awarded or recovered immovable property, represented by the book cost of the goods, a provision equivalent to twenty percent (20%) of said cost shall be required, except in the case of immovable property awarded in reverse mortgage operations. If the net realizable value reflected in the valuation report demonstrates that the asset has depreciated by a percentage greater than 20%, the initial provision required shall be constituted for the amount effectively depreciated. In the case of properties adjudicated in reverse mortgage operations, the initial provision is made at the end of the eighteen (18) month period if the company has the extension referred to in article 215° of the General Law, or twelve (12) months if the company does not have said extension.3

If the net realizable value is greater than the net book value, companies may not recognize the greater value in accounting.

In the case of assets that do not have the extension referred to in article 4° of this Regulation and have not been sold or delivered in financial leasing within the one (1) year period indicated in article 215° of the General Law, companies must constitute provisions from the expiration of said period up to an amount equivalent to one hundred percent (100%) of the book cost of the unsold assets.

If this Superintendency grants the extension provided in article 215° of the General Law, companies must constitute provisions from the expiration of said period until reaching the equivalent of one hundred percent (100%) of the book cost of the unsold assets. Prior to this, companies must make, if applicable, the provision for depreciation, as indicated in the second paragraph of article 4° of this Regulation

For the purposes of constituting provisions, once the holding period of the real estate assets has expired, companies must constitute provisions in accordance with the following scheme:

a) Within a period of three and a half (3.5) years, companies must constitute a uniform monthly provision, at the end of each month, on the net book value obtained in the eighteenth (18th) or twelfth (12th) month, depending on whether or not they had the extension, respectively, until completing an amount equivalent to one hundred percent (100%) of the book cost of the unsold assets.

b) The updating of the valuations of said assets will necessarily imply the constitution of provisions for depreciation, if the net realizable value of the asset is less than its net book value.

The age of the valuations may not be greater than one year. If the net realizable value is greater than the net book value, companies may not recognize the greater value in accounting.

3) Trust for dation in payment

When trustee rights of trusts for dation in payment are acquired, whether or not represented in participation certificates, companies must make the initial registration based on the type of assets that comprise it (movable or immovable assets). In the case of other modalities of assets that make up the trust, the determination of the adjudication value will require a favorable opinion from this Superintendency.

[3] Paragraph modified by Resolution SBS N° 4838-2019 of 17/10/2019

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If the sale is not made and the delivery of the asset subject to this trust corresponds, the calculation of provisions will not be altered, considering the period for its constitution from the receipt of the trustee rights.

Article 6°.- Sale or financial leasing of assets to related parties

Companies must request authorization from this Superintendency, if the adjudicated and recovered assets are transferred to persons related to the company in accordance with article 202° of the General Law, regardless of the type of transfer or the modality of the sale (cash or financed). For this purpose, companies shall present an application, attaching at least the following information and documentation:

a. Certified copy of the Board of Directors Minutes in which the transfer operation of adjudicated and recovered assets is approved;

b. Credit risk classification according to Resolution SBS N° 808-2003 of the acquirer in cases of financed transfers;

c. Copy of the draft purchase-sale contract;

d. Identification of the assets to be transferred, detailing in each case and as applicable:

• Initial adjudication or recovery value

• Net realizable value at the date of adjudication or recovery and at the date of sale or delivery in financial leasing.

• Book value of the assets

e. Provisions constituted and required of the assets to be transferred;

f. Sale value of the assets, modality and periodicity of payment;

g. Gain or loss with respect to book value;

h. Accounting record of the operation;

i. Effects of the transfer on the effective equity, provisions and global and individual limits of the transferring company; and,

j. 4

This Superintendency will rule within thirty (30) business days after receipt of the authorization request that has the information and documentation indicated above. In the case of sales, for individual values less than or equal to three (3) Tax Units (UIT), the company will be obliged only to communicate to this Control Body within a period of fifteen (15) calendar days after its completion, attaching the information and documentation indicated above.5

In the case of financed sales to related parties, the provision may be gradually reversed, based on the payments received, without considering interest. For this purpose, the balance of the provision must be recorded in accordance with the provisions established in the Accounting Manual.

In the case of cash or financed transfers of foreclosed or repossessed assets to those related companies that are not under the direct supervision of the Superintendency or similar bodies, in which the company holds an equity interest, the term established in Article 5 of this Regulation shall be cumulative, provided that the total balance of the gross value of assets acquired by the related company exceeds the

[4] Subsection repealed by Superintendency Resolution No. 12870-2009 of 10/09/2009

[5] Paragraph replaced by Superintendency Resolution No. 1317-2006 of 10/10/2006 and amended by Superintendency Resolution No. 12870-2009 of 10/09/2009.

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equivalent of the capital allocated by the company to said related company, so in such cases, the companies shall maintain the provisions under the same regime established in this regulation, for the assets acquired by the related companies that generate said excess. It should be added that if the company decides to make additional capital contributions to the aforementioned related company, for purposes of calculating the limit indicated above, only additional cash contributions shall be considered.

The provisions constituted for the assets indicated in the preceding paragraph may only be reversed up to the amount of the recognized loss, resulting from the difference between the gross value of the foreclosed or repossessed asset and the sale value, provided that the transfer has been in cash. In the case of financed transfers, the reversal shall be made proportionally to the payments received, provided that the credit has been recovered through cash payments.

The provisions established in the preceding paragraphs are also applicable in the case where the rights over trusts of dation in payment are transferred to related companies of the company.

Article 7.- New foreclosure or repossession of assets

In the case of a new repossession or foreclosure of assets that have been sold in installments or with financing granted by the company, or delivered under financial lease, the companies must constitute provisions for an amount equivalent to one hundred percent (100%) of the book cost of the assets, at the time of foreclosure or repossession.

Article 8.- Transfer of foreclosed and repossessed assets to fixed assets

To carry out the transfer of repossessed or foreclosed assets to fixed assets, the companies must have prior authorization from this Superintendency, and must submit the following:

1. A request attaching information that allows confirming that the assets to be transferred are effectively used to cover their expansion and/or investment requirements.

2. Identification of the assets that will be transferred to fixed assets, attaching an updated valuation report.

3. In the case of multiple operations companies, the request must state the effect of said transfer on the calculation of the limit for investment in movable and immovable property established in numeral 6 of Article 200 of the General Law, as well as on the sublimits contemplated in Superintendency Resolution No. 831-98.

This supervisory body may request from the companies the additional information it considers appropriate and/or carry out the on-site verifications it deems pertinent, and shall issue its decision within thirty (30) business days following receipt of the request that includes all the aforementioned information.6

The companies must adhere to the accounting treatment established in the Accounting Manual.7

Article 9.- Adjustment of provisions

This Superintendency may require additional provisions to those provided in this Regulation, in accordance with the provisions of Article 354 of the General Law.

Article 10.- Obligation to report

The companies must submit monthly to this Superintendency Annexes No. 4-A "Foreclosed and Repossessed Assets" and No. 4-B "Information on Sale or Delivery under Financial Lease of Foreclosed and Repossessed Assets" of the Accounting Manual, within 15 days following

[6] Paragraphs 1 and 2 of Article 8 amended by Superintendency Resolution No. 12870-2009 of 10/09/2009

[7] Paragraph amended by Superintendency Resolution No. 7036-2012 of 19/09/2012

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the close of each month. The submission of said Annexes shall be in printed form and through the External Capture and Validation Submodule (SUCAVE). Annex 4-B must be submitted each time a sale or delivery under financial lease occurs, and must be reported only once.

Article 11.- Information system

The companies must have a registry that allows accumulating the information submitted to this Superintendency through Annexes No. 4-A and No. 4-B of the Accounting Manual, the gain or loss obtained from said sale or placement, the holding time of the assets, among others, in such a way that it allows building a base of indicators for the adequate management of recovery of foreclosed and repossessed assets. Said registry must be available to this Superintendency.

Article 12.- Manual

The companies must have a Manual containing the policies and procedures for monitoring information and identifying alert mechanisms that allow detecting abrupt variations in the value of immovable property, as well as for conducting valuations in accordance with the provisions of this Regulation.

The Manual must be approved by the Board of Directors of the companies, be permanently updated and be available to the Superintendency when requested.

Article 13.- External collaborators

The internal audit unit must include in its annual work program the evaluation of compliance with the provisions of this Regulation.

FINAL AND TRANSITORY PROVISIONS

First.- Exceptional treatment

Exceptionally, the extension referred to in article 215° of the General Law and article 4° of these Regulations shall be considered as granted, until 31 December 20068, for those companies that require it, without the need for an authorization request or a Resolution from this Superintendency.

Without prejudice to the provisions of the preceding paragraph, the companies shall continue to be subject to the provisions of this regulation.

Second.- Deadline for adaptation of provisions

Companies that have received foreclosed or recovered real estate prior to the effective date of these Regulations must adapt to the new provisions regime set forth in article 5º. The appraisal carried out by an appraiser, for real estate, shall be required for those that do not yet have one or whose appraisal is more than one (1) year old, and such appraisal must be carried out within six (6) months from the effective date of these Regulations.

Third.- Excess provisions

Companies that, as a result of the new provisions provisions set forth in article 5°, present excess provisions, must reallocate the amount resulting from the reversal of provisions for the recognition of expense for provisions of other assets; otherwise, they shall be

[8] By Resolution SBS N° 04356-2024, the exceptional treatment was extended until 31 December 2026.

SUPERINTENDENCY OF BANKING, INSURANCE AND AFP

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maintained in the corresponding provisions accounts established for such purpose in the Accounting Manual.

Fourth.- Annex No. 4 of the Accounting Manual

Companies must submit, up to the information corresponding to the month of December 2005, Annex No. 4 in accordance with the frequency, deadline and format in force up to that date, in printed form. For such purpose, companies must adapt the provisions columns to the new provisions provisions set forth in article 5° of these Regulations.

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ANNEX 1

AMENDMENTS TO THE ACCOUNTING MANUAL FOR COMPANIES OF THE FINANCIAL SYSTEM

I. Amend in Chapter II “Financial Statements for Submission to the Superintendency of Banking and Insurance and for Publication” of the Accounting Manual, Form A “Balance Sheet” as well as its grouping rules, in the following terms:

1. Replace the grouping rules of the “Loan Portfolio” item, which shall be composed of the following: 1400-2901.01-2901.02-2901.04-2901.08.01+SD(2101.01)

2. Replace the grouping rules of the “Current Loan Portfolio” item, which shall be composed of the following: 1401-2901.01.01-2901.02.01-2901.04.01-2901.08.01.01+SD(2101.01)

3. Replace the grouping rules of the “Restructured Loan Portfolio” item, which shall be composed of the following: 1403-2901.01.03-2901.04.03-2901.08.01.03

4. Replace the grouping rules of the “Refinanced Loan Portfolio” item, which shall be composed of the following: 1404-2901.01.04-2901.04.04-2901.08.01.04

5. Replace the grouping rules of the “Past Due Loan Portfolio” item, which shall be composed of the following: 1405-2901.01.05-2901.02.05-2901.04.05-2901.08.01.05

6. Replace the grouping rules of the “Loan Portfolio in Judicial Collection” item, which shall be composed of the following: 1406-2901.01.06-2901.02.06-2901.04.06-2901.08.01.06

7. Remove from the grouping rules of the “Total Assets” item, subaccount 2901.08.01

8. Remove from the grouping rules of the “Other Liabilities”, “Total Liabilities” and “Total Liabilities and Equity” items, subaccount 2901.08.01

II. Amend in Chapter II “Financial Statements for Submission to the Superintendency of Banking and Insurance and for Publication” of the Accounting Manual, Form B “Income Statement” as well as its grouping rules, in the following terms:

1. Replace the grouping rules of the “Provisions, Depreciation and Amortization” item, which shall be composed of the following: 4303+4304-(4304.01.01.02+4304.02.01.01)+4305+4401+4403

2. Replace the name of the item “Provisions for Impairment and Depreciation of Realizable Assets, Received in Payment, Foreclosed and Assets Out of Use”, as well as the respective account 4304 with:

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“Provisions for Assets Out of Use, Impairment and Depreciation of Assets in Real Estate Capitalization, and Others” comprising the accounts: 4304-(4304.01.01.02+4304.02.01.01)

3. Incorporate in the “Other Income and Expenses” item the item called “Net Income (Net Expenses) from Recovery of Loans”, which shall be composed of: -4304.01.01.02-4304.02.01.01+6201.04+6201.09.03-6301.09.03-6301.09.04+6401.07+ 6401.09.03

4. Replace the grouping rules of the “Other Income and Expenses” item, which shall be composed as follows: -4304.01.01.02-4304.02.01.01+6200+(6400-6401.04)-6300-(6500-6501.02)

5. Replace the grouping rules of the “Extraordinary Income” item, which shall be composed as follows: 6200-6201.04-6201.09.03

6. Replace the grouping rules of the “Income from Prior Years” item, which shall be composed as follows: 6400-6401.04-6401.07-6401.09.03

7. Replace the grouping rules of the “Extraordinary Expenses” item, which shall be composed as follows: 6300-6301.09.03-6301.09.04

8. Remove from the “Operating Result” and “Result for the Year before Participations and Income Tax” items, accounts 6100 and 6601, respectively.

III. Amend Chapter III “Chart of Accounts” and IV “Description and Dynamics of Accounts” as follows:

1. Replace the first paragraph of the description of item 14 "Créditos" with the following text: "It comprises the accounts that represent the receivables for money granted by the companies of the financial system to customers under the different credit modalities from their own resources, from those received from the public in deposits and from other sources of internal and external financing; as well as the receivables from financial leasing operations, lease-back, portfolio sale, sale of realizable, returned, received in payment and adjudicated goods, and movable capitalisation contracts."

2. Replace the seventh, eighth and ninth paragraphs of the description of accounts 1401.01.11 "Arrendamiento financiero" and 1401.01.12 "Lesae-back" as follows: "When the recovered asset is physically disposed of, it shall be recorded as a realizable asset in analytical account 1601.01.02 "bienes recuperados" at the outstanding debt value or the net realizable value, whichever is lower. If the outstanding balance of the debt is greater than the recovered asset, the difference shall be recognised as a loss provided there are no probabilities of recovery. Immediately upon recovery of the asset, the reversal of the fixed asset account (1808) and of the account "Por contra de bienes cedidos en arrendamiento financiero (2907)" shall be recognised."

"If the physical recovery occurs simultaneously with the termination of the contract, the deferred income shall be eliminated in accounting against the respective credit account. The recovered asset shall be recorded at the outstanding debt value or the net realizable value, whichever is lower. If the outstanding balance of the debt is greater than the recovered asset, the difference shall be recognised as a loss provided there are no probabilities of recovery. Likewise, immediately upon recovery of the asset, the reversal of the fixed asset account and its corresponding contra account shall be carried out."

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"If a re-placement of recovered assets occurs through a financial leasing contract, said operation shall be recorded as a financial leasing operation, and the gross value of the placement must be accounted for in these analytical accounts, crediting the amount of the recovered asset to analytical account 1601.01.02 "Bienes recuperados", and the difference between the gross value of the placement and the amount of account 1601.01.02 shall be recorded in subaccount 2901.04 "Ingresos por arrendamiento financiero no devengados". Said amount shall be recognised as income as the instalments accrue. If the value of the placement is less than the value of account 1601.01.02, a loss must be recognised. The provisions constituted for the recovered assets recorded in subaccount 1609.01 "(Provisión para bienes realizables)" must be reassigned, reversed or maintained in accordance with the provisions of the Regulation for the Treatment of Adjudicated and Recovered Assets. In the case of the provision for assets that have been transferred to related parties, and that has not been reversed against results, the provision shall be reclassified in accounting to analytical account 2702.07.01".

3. Replace the fourth paragraph of the description of account 1405 "Créditos Vencidos" with the following text: "In the case of consumer credits, mortgage loans for housing and financial leasing operations, a staggered treatment is followed for the consideration of overdue credit: after thirty (30) calendar days of not having paid on the agreed date, only the unpaid portion shall be considered overdue; whereas after ninety (90) calendar days overdue, the entire outstanding debt shall be considered."

4. Replace the sixth and seventh paragraphs, as well as incorporate as the penultimate and last paragraphs, in the description of account 1601 "Bienes Realizables", as follows: "The assets recovered or restituted by termination of contract must be incorporated into the assets of the leasing company or of the ECI, as applicable, from the date of physical possession. The aforementioned assets must be recorded at the outstanding debt value or the net realizable value, whichever is lower. If the outstanding balance of the debt is greater than the recovered or restituted asset, the difference shall be recognised as a loss provided there are no probabilities of recovery."

"The assets recovered because the debtor has not exercised the right of the purchase option shall be recorded at the residual value or net realizable value, whichever is lower."

"If a loss occurs in the re-placement or sale of assets, said loss shall be recognised immediately."

"If the financial system company decides to usufruct them to cover its expansion and/or investment requirements, the realizable assets shall be transferred to the corresponding fixed asset accounts, with prior authorisation from this Superintendency and in accordance with the provisions that this control body has established in this regard."

5. Replace the second, third and last paragraphs of the description of account 1602 "Bienes Recibidos en Pago y Adjudicados" with the following: "The recording of assets received in payment or adjudicated shall occur on the date of the dation in payment contract, or at the time of judicial or extrajudicial adjudication."

"Assets received in payment and adjudicated must be recorded in accordance with what is agreed according to the dation in payment contract or the value of judicial or extrajudicial adjudication.
In no case shall the value of the adjudicated asset be greater than the total value of the debt that is cancelled."

"If the financial system company decides to usufruct them to cover its expansion and/or investment requirements, the assets received in payment or adjudicated shall be transferred to the corresponding fixed asset accounts, with prior authorisation from this Superintendency and in accordance with the provisions that this control body has established in this regard."

6. The following text is incorporated as the penultimate paragraph in the description of account 1602 "Bienes Recibidos en Pago y Adjudicados": "In the event that a loss occurs in the relocation or sale of goods, said loss shall be recognized immediately."

7. The first paragraph of the description of heading 27 "Provisiones" is replaced with the following text: "It comprises the provisions for contingencies that the company establishes by affecting the result of the year, but whose payment or settlement will be made in the following year or years. Likewise, it includes provisions for country risk, provisions for impairment of goods placed in real estate capitalization in accordance with the provisions of the ECI Regulations and other provisions in accordance with the rules established by this Superintendency."

8. The following subaccount and analytical accounts are incorporated into account 2702 "Otras Provisiones":

2702.07	Provision for Foreclosed and Recovered Assets
2702.07.01	Provision for Foreclosed and Recovered Assets transferred to related parties
2702.07.02	Excess of Provisions for Foreclosed and Recovered Assets

9. The following is incorporated into the credits of the dynamics of accounts: 2701 and 2702:

• CREDITS: - For the provisions of adjudicated or recovered goods that have been transferred to related parties, and for the excess of provisions of adjudicated or recovered goods."

  10. The following text is incorporated as the description of subaccount 2702.07 "Provisión por bienes Adjudicados y Recuperados": "In this subaccount, the provision for adjudicated or recovered goods that have been transferred to related parties, and that have not been reversed against the results of the year, shall be initially recorded, in accordance with the Regulations for the Treatment of Adjudicated and Recovered Goods and their Provisions. Subsequently, the reversal of the provisions shall be made with a credit to expense accounts 4304 or 6401.09.03, as applicable. Likewise, the excess of provisions established for adjudicated or recovered goods is recorded."

  11. The third paragraph of the description of heading 29 "Otros Pasivos" is replaced with the following text: "For presentation in the Balance Sheet, the balances of subaccounts 2901.01 Ingresos por Intereses y Comisiones, 2901.02 Ingresos por Intereses y Comisiones Cobrados por Anticipado, 2901.04 Ingresos por Arrendamiento Financiero no Devengados and 2901.08.01 Utilidad en venta financiada de bienes adjudicados y recuperados, must be deducted from the corresponding asset accounts."

  12. The description of account 2901 "Ingresos Diferidos" is replaced with the following text: "In this account, those income received by the company in advance, before they have actually been accrued, the unearned income from financial leasing operations, as well as the deferred gains or income from capitalization of receivables, transfer and acquisition of portfolio, sale of adjudicated and recovered goods, among others, are recorded."

  13. The analytical account 2901.07.04 called "Ingresos por transferencias de bienes adjudicados y recuperados al activo fijo" is incorporated into subaccount 2901.07 "Otros Ingresos Diferidos".

  14. The following text is incorporated as the description of analytical account 2901.07.04 "Ingresos por transferencias de bienes adjudicados y recuperados al activo fijo": "In this analytical account, the deferred income from the incorporation of adjudicated and recovered goods into the company's fixed assets shall be initially recorded in accordance with the Regulations for the Treatment of Adjudicated and Recovered Goods and their Provisions."

  15. The following analytical account and analytical subaccounts are incorporated into subaccount 2901.08 "Ingresos por venta de bienes":

2901.08.01	Gain on financed sale of foreclosed and recovered assets
2901.08.01.01	Créditos vigentes
2901.08.01.03	Créditos reestructurados
2901.08.01.04	Créditos refinanciados
2901.08.01.05	Créditos vencidos
2901.08.01.06	Loans in judicial collection
2901.08.09	Otros

16. The following text is incorporated as the description of analytical account 2901.08.01 "Utilidad en venta financiada de bienes adjudicados y recuperados": "In this analytical account, the gain generated in the financed sale of adjudicated and recovered goods is recorded, according to the accounting status of the credit, whose amount shall be recognized against the results of the year in analytical account 6201.09.03 as the installments accrue."

17. The following analytical subaccounts are incorporated into account 4304 "Provisiones y depreciaciones para bienes realizables,

Los Laureles No. 214 - Lima 27 - Peru Tel.: (511)2218990 Fax: (511)4417760

received in payment, adjudicated and goods out of use, the following analytical subaccounts:

4304.01.01.01	Bienes para colocación
4304.01.01.02	Bienes recuperados
4304.01.01.03	Bienes restituidos
4304.02.01.01	Assets awarded and received in payment
4304.02.01.02	Assets awarded and received in payment – real estate capitalization

18. The analytical account 6201.09.03 "Ganancia en venta de bienes recuperados y adjudicados" is incorporated into subaccount 6201.09 "Otros Ingresos Extraordinarios".

19. The following is incorporated as the description of analytical account 6201.09.03: "In the analytical account, the income obtained from the sale of adjudicated and recovered goods shall be recorded, as well as the recognition of the accrual of deferred income in the event that the financed sale has occurred."

20. The following analytical accounts are incorporated into subaccount 6301.09 "Otros Gastos Extraordinarios":

6301.09.03	Loss on sale of repossessed and awarded assets
6301.09.04	Expenses for awarded and repossessed assets

21. Incorporate as the description of analytical accounts 6301.09.03 and 6301.09.04 the following: “In analytical account 6301.09.03 the loss obtained in the sale or placement of foreclosed and recovered assets shall be recorded, and in analytical account 6301.09.04 the expenses related to the maintenance of foreclosed and recovered assets such as appraisal, energy, water, security and property expenses shall be recorded”.

22. Replace the description of item 64 “Income from Previous Years” in accordance with the following text: “It comprises income originating from the correction of errors or omissions incurred in previous years that are recognized in the current year, as well as the decrease in provisions”.

23. Incorporate in subaccount 6401.09 “Other Income from Previous Years” the analytical account 6401.09.03 “Reversal of provisions for foreclosed and recovered assets”.

24. Incorporate as the description of analytical account 6401.09.03 the following: “In this analytical account the reversal of provisions for foreclosed and recovered assets shall be recorded, in case such assets are sold or placed, whose provisions were constituted in previous years. In case of financed sales to related parties, the reversal of provisions shall be made in accordance with the Regulation for the Treatment of Foreclosed and Recovered Assets and their Provisions, issued by this Superintendency”.

25. Reclassify the balances of subaccounts 6201.01 “Sale of assets received in payment and foreclosed” and 6301.01 “Cost of sale-assets received in payment and foreclosed” to the analytical accounts created for the recording of the gain, loss and reversal of provisions of foreclosed and recovered assets, as applicable, indicated

Los Laureles No. 214 - Lima 27 - Peru Tel.: (511)2218990 Fax: (511)4417760

above.

26. Eliminate subaccounts 6201.01 “Sale of assets received in payment and foreclosed” and 6301.01 “Cost of sale-assets received in payment and foreclosed”.

27. Any reference in the Manual to SBS Circular N° B-2075-2000 must be replaced by the Regulation for the Treatment of Foreclosed and Recovered Assets and their Provisions.

IV. Amend in Chapter V “Annexes and Reports to the Financial Statements”, the following:

1. Replace Annex N° 4 “Foreclosed and Recovered Assets” with Annexes N° 4 -A “Foreclosed and Recovered Assets” and N° 4-B “Information on Sale or Delivery in Financial Leasing of Foreclosed and Recovered Assets”, in accordance with the formats shown in the attached annex, the same that will be required from the information of January 2006.

2. Annex N° 5 “Report on Classification of Debtors and Provisions”: In numeral V called “Balance Figures”, in the column “Amount, credits, contingents and financial leasing”, deduct in V1 the analytical account 2901.08.01.

3. Report Nº 2 Annex A “Assets and Contingent Credits Weighted by Risk”: Incorporate in items I, II, III, IV and V, the following:

Less:	Deferred income - Gain on financed sale of foreclosed and recovered assets	For the part corresponding to this category