Lima, 10 February 2005

S.B.S. Resolution No. 257 -2005

The Superintendent of Banking and Insurance

WHEREAS:

That, by means of Law No. 28364 of 21 October 2004, the Law regulating the Real Estate Capitalization Contract was approved;

That, in paragraph 2.1 of Article 2 of Law No. 28364 it is stated that the activity of real estate capitalization companies consists of carrying out real estate promotion, purchasing and/or building real estate and, in relation to them, entering into real estate capitalization contracts with third parties, delivering the corresponding real estate in deposit to the client, and that such companies are supervised by this Superintendency;

That, Article 295 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 the General Law, provides that it corresponds to this Superintendency to issue the rules regulating the various matters related to real estate capitalization companies and their operations;

That, Article 15 of Law No. 28364 establishes that this Superintendency shall issue the regulatory provisions necessary for the best application of said Law;

That, by means of SBS Resolution No. 895-98 the Accounting Manual for Companies of the Financial System was approved;

That, it is necessary to make modifications to the Accounting Manual for Companies of the Financial System in order to allow the recording of the operations to be carried out by real estate capitalization companies;

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

In use of the powers conferred by numerals 7, 9 and 13 of Article 349 of the General Law, and in accordance with the provisions of Article 295 of the same Law;

RESOLVES:

Article One.- To approve the Regulation of Real Estate Capitalization Companies, which forms an integral part of this Resolution.

Article Two.- To modify the Accounting Manual for Companies of the Financial System, hereinafter the Accounting Manual, in accordance with Annex 1 attached to this norm.

Article Three.- To incorporate into Chapter V "Annexes and Reports to the Financial Statements" of the Accounting Manual, Annex No. 25 called "Assets for Placement, Received in Payment, Adjudicated and Restituted", in accordance with the format indicated in Annex 2 attached to this norm, whose periodicity shall be semiannual and must be sent to this Superintendency within 15 calendar days after the close of each semester. The submission of said Annex shall be in printed form.

Article Four.- To incorporate into Chapter V "Annexes and Reports to the Financial Statements" of the Accounting Manual, Annex No. 26 called "Assets Placed in Real Estate Capitalization", in accordance with the format indicated in Annex 3 attached to this norm, whose periodicity shall be annual and must be sent to this Superintendency within 15 calendar days after the close of each year. The submission of said Annex shall be in printed form.

Article Five.- Incorporate as the last paragraph of numeral 1.4. "Mortgage Loans for Housing" of Chapter I of the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions, approved by SBS Resolution No. 808-2003, the following text:

"Claims arising from real estate capitalization contracts are also considered in this category, provided that such operation has been destined to the acquisition or construction of own housing."

Article Six.- This Resolution enters into force on the day following its publication in the Official Gazette "El Peruano", except for the provisions of articles two, three and four which enter into force as from the information corresponding to the month of April 2005.

Register, communicate and publish.

JUAN JOSÉ MARTHANS LEÓN
Superintendent of Banking and Insurance

REGULATION OF REAL ESTATE CAPITALIZATION COMPANIES

TITLE I OF THE GENERAL PROVISIONS

Article 1.- Scope

The provisions of this Regulation are applicable to real estate capitalization companies.

Article 2.- Definitions

For purposes of this Regulation, consider the following definitions:

a) General Law: 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.

b) ECI: Real estate capitalization companies, defined in Article 295 of the General Law and in Article 2 of Law No. 28364.

c) Client: Natural or legal person who enters into a real estate capitalization contract.

TITLE II OF THE REAL ESTATE CAPITALIZATION COMPANIES

Article 3.- Corporate purpose

The ECI are companies of the financial system incorporated as corporations, whose corporate purpose consists of carrying out real estate promotion, purchasing and/or building real estate, and, in relation to such real estate, entering into real estate capitalization contracts.

Article 4.- Incorporation

The incorporation of real estate capitalization companies is carried out in accordance with the provisions of the Regulation for the Incorporation and Establishment of Companies and Representatives of the Financial and Insurance Systems, approved by SBS Resolution No. 600-98 and its amendments, insofar as applicable.

Article 5.- Permitted operations

The ECI may carry out the following operations in addition to those contemplated in Article 2 numeral 2.3 and Article 4 of Law No. 28364:

a) Issue bonds, in national or foreign currency, including ordinary, convertible and subordinated bonds of various types and in various currencies, as well as promissory notes and other instruments representing obligations.

b) Acquire, hold and sell instruments representing private debt and instruments representing equity that are subject to any centralized trading mechanism in accordance with the relevant law.

c) Acquire, hold and sell shares of companies whose purpose is to provide complementary or auxiliary services to ECI and/or their subsidiaries.

d) Acquire, hold and sell, as participants, participation certificates in mutual funds and investment funds.

e) Buy, hold and sell securities representing public debt, domestic and foreign, as well as obligations of the Central Bank.

f) Buy, hold and sell bonds and other securities issued by multilateral credit organizations of which the country is a member.

g) Buy, hold and sell securities representing the debt of foreign governments, provided that the lowest rating assigned to such instruments is not lower than BBB-, in accordance with Annex B of the Regulation for the Classification, Valuation and Provisioning of Investments of Companies in the Financial System, approved by SBS Resolution No. 1914-2004.

h) Operate in foreign currency.

i) Acquire the real estate, furniture and equipment necessary for its activity.

j) Buy, hold and sell gold.

k) Act as settlor of trusts governed by the General Law.

l) Act as originator in securitization processes in accordance with the Single Ordered Text of the Securities Market Law approved by D.S. No. 093-2002-EF and the provisions issued by the National Supervisory Commission of Companies and Securities.

m) Other operations necessary for the fulfillment of its corporate purpose.

Article 6°.- Real estate built by third parties

In cases where the ECI entrust the construction of real estate subject to real estate capitalization contracts to third parties, such companies may request from the constructor the guarantees they consider necessary to back the existence, completion and delivery of the real estate that will be delivered in deposit to the clients.

TITLE III OF THE REAL ESTATE CAPITALIZATION CONTRACT

Article 7º.- Content of the real estate capitalization contract

The document representing the real estate capitalization contract must contain, at least, the following:

a) Identification of the parties.

b) Identification of the real estate subject to the contract.

c) Market price of the real estate at the time of entering into the contract, which shall not include taxes.

d) Payment schedule that establishes for each installment, the part destined to the payment for the right of use of the real estate and the part destined to the payment of the client's individual capitalization contribution.

e) Expenses, taxes and insurance premiums payable by the client, as well as other amounts agreed upon by mutual agreement between the parties.

f) Term of the contract and the express recognition of the client's right to exercise the purchase option at any time during said term.

g) Declaration by the client of knowledge of the prohibition to lease the real estate to third parties.

h) Method of payment of the installments, as well as place and date of payment of each installment.

i) Specification of the insurances that must be contracted by the client and the ECI's right to contract them on behalf or at the expense of the client, if the client does not do so within the established term.

j) The client's possibility to assign its contractual position and what must be taken into account to make said assignment.

k) The grounds and effects of the termination of the contract, including the provisions of article 9° of this regulation.

Article 8°.- Information that ECI must provide to clients

In the installment payment notice, the part destined to the payment for the right of use of the real estate and the part destined to the payment of the client's individual capitalization contribution must be indicated. In addition, the amounts destined to the payment of taxes, insurance premiums, expenses and other amounts agreed upon by mutual agreement between the parties must be detailed.

The ECI shall provide the client with information regarding the payments made and the outstanding balance of the real estate price at the close of the months of December, April and August. Such information must be delivered in the month following the one to which the information corresponds.

Article 9°.- Termination of contract

In the event of termination of the real estate capitalization contract, the ECI may demand the immediate return of the real estate subject to the contract, in accordance with article 10° of Law No. 28364. Once the real estate is delivered, and when the ECI has placed the real estate with another client, the ECI shall deliver to the client the amount corresponding to the individual capitalization and the interest that may have been agreed, after deducting, if applicable, the amounts owed by the client, the damages that the real estate may have suffered and other expenses incurred in the return of the property. The client shall also assume the loss of value of the real estate that occurs at the time the ECI transfers the real estate subject to return to a third party.

Article 10°.- Approval of contracts

The ECI must submit to the administrative approval of this Superintendency the models of contracts to be used in real estate capitalization operations, in accordance with numeral 5.6 of article 5° of Law No. 28364 and numeral 8 of article 349° of the General Law.

TITLE IV OF PRUDENTIAL MEASURES

Article 11°.- Credit risk management

The ECI must constitute provisions for credit risk, considering the real estate capitalization contracts entered into by such companies as credits granted to their clients for the acquisition of real estate. In this sense, the provisions on debtor classification and credit risk provisions contained in 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, are applicable to ECI.

Assets subject to real estate capitalization contracts shall be considered preferred collateral for provisioning purposes.

The portion of the installments of real estate capitalization contracts corresponding to the contribution to the client's individual capitalization shall be considered as payments on account of the credit received by the clients.

Article 12.- Global and individual limits

The limits indicated in Chapter II of Title II of Section Two of the General Law shall be applicable to ECI, for which real estate capitalization contracts entered into by ECI are considered as financing granted to their clients.

The portion of the installments of real estate capitalization contracts corresponding to the contribution to the client's individual capitalization shall be considered as payments on account of the financing received by the clients.

Article 13.- Credit risk weighting

For the computation of the global limit of Article 199 of the General Law, real estate capitalization contracts entered into by ECI are considered as credits granted to their clients for the acquisition of real estate. In this sense, the calculation of the credit risk weightings of ECI assets is subject to the provisions of Articles 188 to 196 of the General Law.

The portion of the installments of real estate capitalization contracts corresponding to the contribution to the client's individual capitalization shall be considered as payments on account of the credit received by the clients.

Article 14.- Administration of interest rate and liquidity risks

ECI must adequately manage the interest rate and liquidity risks they face. For this purpose, the provisions of Circular No. F-464-2003, CM-311-2003, CR-180-2003, EDPYME-103-2003, EAF-214-2003 of 31 October 2003 and Circular No. EAF-215-2003 of 31 October 2003 shall be applicable to ECI.

Article 15.- Prudential treatment of ECI investments

ECI must adhere to the provisions of the Regulation for the Classification, Valuation and Provisions of Investments of Companies of the Financial System, approved by SBS Resolution No. 1914-2004 and the Rules for Investment in Instruments Traded Through Non-Centralized Negotiation Mechanisms, approved by SBS Resolution No. 964-2002 and its amendments.

Article 16.- Depreciation and Provision for Impairment

For those real estate properties that have not yet been delivered to clients, that have been returned due to resolutions of real estate capitalization contracts, that are the product of adjudications or that have been received in payment, ECI must make the respective depreciation. Additionally, provisions must be constituted annually for the difference between the value at which the asset net of depreciation is recorded in accounting and its market value.

For movable assets received in payment and adjudicated, provisions must be constituted annually for the difference between the value at which the asset is recorded in accounting and its market value.

In the case of assets delivered to clients, ECI must constitute annually provisions for the amount by which the difference between the market price of the real estate at the time the real estate capitalization contract is entered into and its market value exceeds the amount of accumulated individual capitalization.

The market value to be considered shall be the net realizable value. The determination of the net realizable value shall be made annually following the provisions 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.

TITLE V OF THE INFORMATION TO BE SUBMITTED TO THIS SUPERINTENDENCY

Article 17.- Financial information

ECI must record their operations in accordance with the Accounting Manual for Companies of the Financial System approved by SBS Resolution No. 895-98 of 1 September 1998 and its amendments.

Article 18.- Complementary information

ECI must submit to this Superintendency the following Annexes and Reports:

Annex 5 - Report on Debtor Classification and Provisions

Annex 6 - Debtor Credit Report

Annex 7 applicable to Financieras, Cajas Municipales, Cajas Rurales, EDPYME and EAF – Measurement of Interest Rate Risk in MN and ME

Annex 16 applicable to EAF – Liquidity Table by Maturity Terms. In this Annex, what is not applicable to financial leasing companies shall also not be applicable to ECI

Annex No. 25 – Assets for Placement, Received in Payment, Adjudicated and Returned

Annex No. 26 – Assets Placed in Real Estate Capitalization

Report 1 – Transfer of Shares of Companies of the Financial System

Report 2 (Annexes A and B) – Risk-Weighted Assets and Contingent Credits, and Summary of Assets and Contingent Credits Weighted by Credit Risk and Capital Requirements for Market Risk

Report 3 – Effective Equity Adjusted for Inflation

Report 19 – Report on the Company's Economic Group

Report 19-A – Information on Legal Entities Members of the Economic Group

Report 21 – Financing to Parties Related to the Company

Report 21-A – Information on Legal Entities Related to the Company

Report 24 – Information on Claims Received from Users

Report 24-B – Detail of Other Operations – Services or products and Other Reasons for Claim

FINAL PROVISIONS

First.- Dissolution and Liquidation

If the ECI were subject to compulsory liquidation, the assets and liabilities linked to real estate capitalization operations shall be excluded from the estate, and shall be transferred to another ECI. For these purposes, the Superintendency shall endeavor to ensure that the absolute difference between the respective book values of the transferred assets and liabilities is as small as possible, in accordance with the provisions of numeral 2 of article 118° of the General Law.

The dissolution and liquidation of the ECI shall be governed by the provisions contained in Title VII of Section One of the General Law and the complementary rules issued by this Superintendency.

Second.- Other applicable regulations

The ECI are subject to all provisions issued by this Superintendency that include within their scope all companies covered by literal B of article 16° of the General Law.

ANNEX 1

AMENDMENTS TO THE ACCOUNTING MANUAL

I. Amend Chapter II "Financial Statements for Presentation to the Superintendency of Banking and Insurance and for Publication" of the Accounting Manual, as follows:

1. Changes in the names of accounts, subaccounts and analytical accounts made in Chapters III "Chart of Accounts" and IV "Description and Dynamics of Accounts" of the Accounting Manual are also applicable to the Forms contained in Chapter II of the same Manual that include them.

2. Incorporate in Form D - Statement of Changes in Net Equity, under the Item "Others (specify)" the concept of Provision for Impairment of Assets Placed in Real Estate Capitalization.

II. Amend Chapters III "Chart of Accounts" and IV "Description and Dynamics of Accounts" of the Accounting Manual, as follows:

1. Incorporate in item 14 "Credits" the following analytical accounts:

1401.01.07	REAL ESTATE CAPITALIZATION
1401.02.07	REAL ESTATE CAPITALIZATION
1401.04.07	REAL ESTATE CAPITALIZATION
1403.01.07	REAL ESTATE CAPITALIZATION
1403.02.07	REAL ESTATE CAPITALIZATION
1404.01.07	REAL ESTATE CAPITALIZATION
1404.02.07	REAL ESTATE CAPITALIZATION
1404.04.07	REAL ESTATE CAPITALIZATION
1405.01.07	REAL ESTATE CAPITALIZATION
1405.02.07	REAL ESTATE CAPITALIZATION
1405.04.07	REAL ESTATE CAPITALIZATION
1406.01.07	REAL ESTATE CAPITALIZATION
1406.02.07	REAL ESTATE CAPITALIZATION
1406.04.07	REAL ESTATE CAPITALIZATION

2. Replace the first paragraph of the description of item 14 "Credits" with the following:

"Comprises the accounts that represent the receivables for money granted by financial system companies to clients 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 for financial leasing, leaseback and real estate capitalization contracts."

3. Replace the last paragraph of the description of account 1401 "Current Credits" with the following:

"The transfer of the total amount of unpaid credits to the corresponding analytical accounts of account 1405 "Past-Due Credits" shall be made in accordance with the following treatment:

• Commercial credits: After fifteen (15) calendar days from their due date;

• Microenterprise credits: After thirty (30) calendar days from their due date;

• Consumer credits, mortgage for housing, financial leasing operations and real estate capitalization contracts: Only the unamortized portion shall be considered past due after thirty (30) calendar days from its due date; and, the entire debt after ninety (90) calendar days from the due date of the unpaid installment(s)."

  4. Incorporate as the description of analytical account 1401.01.07 "Real Estate Capitalization", the following:

"This analytical account records the amount pending payment of the cash price of the property in real estate capitalization contracts.

The accounting record of the operations is made at the cash price of the property defined in Law No. 28364, crediting the value of the property to analytical account 1601.02.01 "Assets for Placement".

Simultaneously, the ECI shall record for control purposes the assets subject to real estate capitalization contracts in account 1808 "Assets Leased under Financial Leasing and Real Estate Capitalization" and in the respective contra-account in liabilities 2907 "Contra Account for Assets Leased under Financial Leasing and Real Estate Capitalization", at acquisition or construction cost, or at net realizable value, whichever is lower, until the exercise of the purchase option or termination of the contract, with the delivery of the assets.

The installment(s) of the real estate capitalization contract shall become past due after thirty (30) calendar days of non-compliance, and after ninety (90) calendar days of non-compliance the entire credit shall be considered past due.

Until the restitution of the asset occurs, the terminated real estate capitalization contracts shall be reclassified as an account receivable in subaccount 1507.05 for the balance of the cash price of the property pending payment, and the financing recorded in the credit accounts corresponding to real estate capitalization shall be eliminated for accounting purposes. The provisions constituted for the aforementioned credit shall be reclassified as provisions of the account receivable in the corresponding accounts of item 15. In the event of a deterioration in the debtor's classification, the provisions corresponding to said account receivable shall be constituted in accordance with the criteria established in the Regulation for the Evaluation and Classification of the Debtor and the Provision Requirement, until the restitution of the asset occurs.

When the asset is physically available, it shall be recorded as a realizable asset in analytical account 1601.02.02 "Restituted Assets", eliminating the accounts receivable from the accounting records, regardless of the collection claim to be filed. If the outstanding balance of the accounts receivable recorded under heading 15 is greater than the value of the restituted asset, the difference shall be recognized as a loss provided there are no probabilities of recovery. If the outstanding balance of the accounts receivable is less than the value of the restituted asset, the value of the asset shall be adjusted to the value of the accounts receivable, and therefore no gain shall be recognized in the recording of the restituted asset. Likewise, upon restitution of the asset, the fixed asset account (1808) and the account "Contra Account for Assets Leased under Financial Leasing and Real Estate Capitalization" (2907) shall be reversed.

If the restitution of the asset occurs simultaneously with the termination of the contract, the respective credit shall be fully written off. If the outstanding balance of the credit is greater than the value of the restituted asset, the difference shall be recognized as a loss provided there are no probabilities of recovery. If the outstanding balance of the credit is less than the value of the restituted asset, the value of the asset shall be adjusted to the value of the credit, and therefore no gain shall be recognized in the recording of the restituted asset.

Likewise, upon restitution, the fixed asset accounts and their corresponding contra accounts shall be reversed (written off).

If a re-placement of restituted assets occurs through a new real estate capitalization contract, such transaction shall be recorded as a real estate capitalization transaction, and the value of the credit must be recorded in this analytical account, with the amount of the restituted asset credited to analytical account 1601.02.02. The provisions and depreciation established for the restituted assets recorded in subaccount 1609.01 "(Provision and Depreciation for Realizable Assets)" must be reallocated or reversed."

5. Replace the fourth paragraph of the description of account 1403 "Restructured Credits" with the following:

"In the case of financial leasing operations and real estate capitalization contracts, the unamortized portion shall be considered overdue after thirty (30) calendar days of non-payment on the agreed date; and the entire credit shall be considered overdue after ninety (90) calendar days of default."

6. Replace the sixth paragraph of the description of account 1404 "Refinanced Credits" with the following:

"In the case of consumer credits, mortgage loans for housing, financial leasing operations and real estate capitalization contracts, only the unamortized portion shall be considered overdue after thirty (30) calendar days of non-payment on the agreed date; and the entire credit shall be considered overdue after ninety (90) calendar days of default."

7. Replace the fourth paragraph of the description of account 1405 "Overdue Credits" with the following:

"In the case of consumer credits, mortgage loans for housing, financial leasing operations and real estate capitalization contracts, a staggered treatment is followed for the consideration of overdue credit: after thirty (30) calendar days of non-payment on the agreed date, only the unpaid portion shall be considered overdue; whereas as of ninety (90) calendar days overdue, the entire outstanding debt shall be considered."

8. Incorporate as a debit in the dynamics of accounts 1401, 1403, 1404, 1405 and 1406, the following:

"- For the cash price of the goods subject to real estate capitalization contracts."

9. Incorporate to account 1507 "Miscellaneous Accounts Receivable", the following subaccounts and analytical accounts:

1507.05	REAL ESTATE CAPITALIZATION CONTRACTS RESOLVED PENDING RESTITUTION OF THE GOODS
1507.05.05	VENCIDOS
1507.05.06	EN COBRANZA JUDICIAL
1507.06	DERECHO DE USO DE INMUEBLE, TRIBUTOS Y OTRAS CUENTAS POR COBRAR A CLIENTES POR CONTRATOS DE CAPITALIZACIÓN INMOBILIARIA

10. Incorporate as the description of subaccount 1507.05 "Real Estate Capitalization Contracts Resolved Pending Recovery of the Goods", the following:

"In this subaccount are recorded the real estate capitalization contracts resolved and pending restitution of the goods. Once the restitution of the goods occurs, they will be recorded in analytical account 1601.02.02 "Restituted Goods"."

11. Incorporate to subaccount 1509.07 "(Provision for Miscellaneous Accounts Receivable)", the following analytical account:

1509.07.05	REAL ESTATE CAPITALIZATION CONTRACTS RESOLVED PENDING RESTITUTION OF THE GOODS

12. Incorporate as the last paragraph of the description of account 1509 "(Provisions for Accounts Receivable)", the following:

"The provisions recorded in analytical accounts 1509.07.04 and 1509.07.05 must be constituted in accordance with the criteria set forth in the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions."

13. Incorporate to account 1601 "Realizable Goods", the following subaccount and analytical accounts:

1601.02	BIENES SUJETOS A CONTRATOS DE CAPITALIZACIÓN INMOBILIARIA
1601.02.01	BIENES PARA COLOCACIÓN
1601.02.02	BIENES RESTITUIDOS

14. Replace the description of account 1601 "Realizable Goods", with the following:

"In this account is recorded the amount of goods acquired, for sale under any modality, including those goods purchased with the specific purpose of being granted in financial leasing and those goods purchased or constructed with the specific purpose of being granted in real estate capitalization contracts. Such goods must be recorded at their acquisition and construction cost, as applicable.

The acquisition cost of these assets must include the net price invoiced by the supplier, freight, insurance and any disbursement necessary until they enter the company's warehouse or property.

At the time the financial leasing or real estate capitalization contract takes effect, this account shall be credited against the respective credit account; proceeding to record the financial leasing or real estate capitalization contract in accordance with the provisions of analytical accounts 1401.01.11 "Financial Leasing" and 1401.01.12 "Lease-Back, or 1401.01.07 "Real Estate Capitalization", as applicable.

Assets intended for financial leasing that were not placed must be recorded at cost or market value, whichever is lower. The market value to be considered shall be the net realizable value.

Assets intended for real estate capitalization contracts that were not placed shall be subject to the respective depreciation. Likewise, for such assets an additional provision for impairment must be made until reaching their market value. The market value to be considered shall be the net realizable value.

Assets recovered or returned due to contract termination must be incorporated into the assets of the leasing company or of the ECI, as applicable, as of physical possession. The aforementioned assets must be recorded at the outstanding debt value or the market value of the asset, whichever is lower. The market value to be considered shall be the net realizable value. If the outstanding balance of the debt is greater than the value of the recovered or returned asset, the difference shall be recognized as a loss provided there is no probability of recovery. If the outstanding balance of the debt is less than the value of the recovered or returned asset, the value of the asset shall be adjusted to the value of the debt, so no gain shall be recognized in the recording of the recovered or returned asset.

Recovered or returned assets shall be recorded at residual value or market value (net realizable value), whichever is lower.

The provisions required for recovered assets shall be made in accordance with the provisions of the General Law and SBS Circular No. B-2075-2000 and its amendments.

Returned assets shall be subject to the respective depreciation. Likewise, for such assets an additional provision for impairment must be made until reaching their market value. The market value to be considered shall be the net realizable value.

In the event of a re-placement of recovered assets through a financial leasing contract, such transaction shall be accounted for as a financial leasing transaction, and the gross placement value must be recorded in the corresponding analytical accounts under heading 14 "Credits", crediting analytical account 1601.01.02 "Recovered Assets", and the difference between the gross placement value and the amount of account 1601.01.02 shall be recorded in subaccount 2901.04 "Unearned Financial Leasing Income". Such amount shall be recognized as income as the installments accrue. Once such re-placement occurs, the provisions constituted for the recovered assets recorded in subaccount 1609.01 must be reallocated or reversed, in accordance with the provisions of SBS Circular No. B-2075-2000 and its amendments.

In the event of a re-placement of returned assets through a new real estate capitalization contract, such transaction shall be accounted for as a real estate capitalization contract, and the placement value must be recorded in the corresponding analytical accounts under heading 14 "Credits", crediting analytical account 1601.02.02 "Returned Assets". Once such re-placement occurs, the depreciations and provisions constituted for the returned assets recorded in subaccount 1609.01 must be reallocated or reversed.

In the case of a financed sale of recovered assets, the financed amount must be recorded in analytical account 1401.01.15 "Debtors for sale of realizable, returned, received in payment and foreclosed assets", with a credit to analytical account 1601.01.02. The gain generated by the difference between the sale value and the gross value of the asset must be recognized as deferred income in subaccount 2901.08 "Income from sale of assets". Such amount shall be recognized as income as the installments accrue. If the sale of the asset is for cash and through a monetary payment, such amount may be recognized as income for the period. Once the sale occurs (financed or cash), the provisions constituted for the recovered assets recorded in subaccount 1609.01 must be reallocated or reversed, in accordance with the provisions of SBS Circular No. B-2075-2000 and its amendments."

15. Replace the fourth paragraph of the description of account 1602 "Assets Received in Payment and Foreclosed", with the following:

"For assets received in payment and foreclosed for recovery of debts other than those originating from real estate capitalization contracts, which remain in the company's possession, the provision established in Circular No. B-2075-2000 must be constituted. Assets received in payment and foreclosed for recovery of debts originating from real estate capitalization contracts, which remain in the company's possession, shall be subject to the corresponding depreciation (in the case of real estate) and/or provision for impairment until reaching their market value (in the case of real estate or movable assets, respectively)."

16. Replace the name of account 1609, as well as of subaccounts 1609.01 and 1609.02, with the following: “(Provisions and Depreciations for Realizable Assets, Received in Payment, Adjudicated and Assets Out of Use)”, “(Provision and Depreciation for Realizable Assets)” and “(Provision and Depreciation for Assets Received in Payment and Adjudicated)”, respectively.

17. Incorporate into subaccounts 1609.01 and 1609.02, the following analytical accounts:

1609.01.01	PROVISION FOR REALIZABLE ASSETS
1609.01.02	DEPRECIATION FOR REALIZABLE ASSETS
1609.02.01	PROVISION FOR ASSETS RECEIVED IN PAYMENT AND ADJUDICATED
1609.02.02	DEPRECIATION FOR ASSETS RECEIVED IN PAYMENT AND ADJUDICATED

18. Replace the first paragraph of the description of account 1609, with the following:

“In this account the corresponding depreciation is recorded, as well as the provision constituted by the company in order to cover the loss of value of realizable assets, assets received in payment and adjudicated and assets out of use, whether due to shrinkage or price decrease, use, obsolescence, deterioration or the reduction of their market value.”

19. Replace the second and third debit, as well as the first credit of the dynamics of account 1609, with the following:

“DEBITS: - For the reduction of depreciation and accumulated provision when a write-off occurs or the asset is transferred for use by the company. - For the depreciation and accumulated provision when the sale of the assets occurs, taking into account the provisions of current regulations. CREDITS: - For the constitution of the depreciations and provisions corresponding to the period.”

20. Replace the fourth paragraph of the description of item 18 “Real Estate, Furniture and Equipment”, with the following:

“Assets transferred under financial leasing and real estate capitalization shall be accounted for in the respective accounts of this item only for control purposes, as well as tax purposes if applicable, and in their corresponding contra account.”

21. Replace the name of account 1805, with the following: “Assets Received under Financial Leasing and Real Estate Capitalization”.

22. Replace the first paragraph of the description of account 1805, with the following:

“In this account the assets received by the company under financial leasing or real estate capitalization are recorded, to be used in the development of its activities.”

23. Replace the name of subaccount 1805.01 with the following: “Real Estate Received under Financial Leasing and Real Estate Capitalization”.

24. Incorporate into subaccount 1805.01, the following analytical accounts:

1805.01.01	REAL ESTATE RECEIVED UNDER FINANCIAL LEASING

1805.01.02
REAL ESTATE
RECEIVED
IN
CAPITALIZATION
REAL ESTATE

25. Incorporate into account 1806 “Works in Progress and Assets to be Received”, the following analytical accounts and subaccounts:

1806.01.01
WORKS EXECUTED BY THE COMPANY ITSELF
1806.01.01.01 WORKS SUBJECT TO REAL ESTATE CAPITALIZATION
CONTRACTS
1806.01.01.02 WORKS
NOT SUBJECT TO CONTRACTS
OF
REAL ESTATE CAPITALIZATION
1806.01.02
WORKS EXECUTED BY THIRD PARTIES
1806.01.02.01 WORKS SUBJECT TO REAL ESTATE CAPITALIZATION
CONTRACTS
1806.01.02.02 WORKS
NOT SUBJECT TO CONTRACTS
OF
REAL ESTATE CAPITALIZATION

26. Incorporate as the last paragraph of the description of account 1806 “Assets in Execution and Assets to be Received”, the following:

“Once the works are finished, the assets to be destined for future real estate capitalization contracts shall be transferred to analytical account 1601.02.01, while the assets already subject to real estate capitalization contracts shall be charged to account 2504.09.”

27. Replace the name of account 1808, with the following: ”Assets Transferred under Financial Leasing and Real Estate Capitalization”.

28. Replace the first paragraph of the description of account 1808 with the following:

“In this account the assets transferred under financial leasing and real estate capitalization are recorded”.

29. Replace the name of subaccount 1808.01 with the following: “Real Estate Transferred under Financial Leasing and Real Estate Capitalization”.

30. Incorporate into subaccount 1808.01, the following analytical accounts:

1808.01.01
REAL ESTATE
TRANSFERRED
UNDER
FINANCIAL
LEASING
1808.01.02
PROPERTIES
TRANSFERRED
IN
REAL ESTATE
CAPITALIZATION

31. Incorporate as a debit in the dynamics of accounts 1801, 1802, 1803, 1804, 1805, 1806, 1807 and 1808, the following:

"- For the accounting cost of the goods taken or transferred in real estate capitalization."

32. Incorporate as credits in the dynamics of accounts 1801, 1802, 1803, 1804, 1805, 1806, 1807 and 1808, the following:

"- For the transfer of the recorded amount of the goods taken in real estate capitalization upon conclusion of the contract.

• For the transfer of the recorded amount of the goods transferred in real estate capitalization upon conclusion of the contract."

33. Replace the name of subaccounts 1809.05 and 1809.08, with: "(Accumulated Depreciation of Goods Received in Financial Leasing and in Real Estate Capitalization)" and (Accumulated Depreciation of Goods Transferred in Financial Leasing and in Real Estate Capitalization)", respectively.

34. Incorporate into subaccounts 1809.05 and 1809.08, the following analytical accounts:

1809.05.01	ACCUMULATED DEPRECIATION OF GOODS RECEIVED IN FINANCIAL LEASING
1809.05.02	ACCUMULATED DEPRECIATION OF GOODS RECEIVED IN REAL ESTATE CAPITALIZATION
1809.08.01	ACCUMULATED DEPRECIATION OF GOODS TRANSFERRED IN FINANCIAL LEASING
1809.08.02	ACCUMULATED DEPRECIATION OF GOODS TRANSFERRED IN REAL ESTATE CAPITALIZATION

35. Incorporate as debits in the dynamics of account 1809, the following:

"- For the reversal of accumulated depreciation due to the retirement of the good taken in real estate capitalization. - For the transfer to the corresponding account of the accumulated depreciation at the termination of the real estate capitalization contract."

36. Incorporate into account 2403 "Debts and Obligations with Companies of the Country's Financial System", the following subaccount:

2403.05	DEBTS FOR GOODS RECEIVED IN REAL ESTATE CAPITALIZATION

37. Incorporate into account 2504 "Miscellaneous Accounts Payable", the following subaccounts:

2504.09	OBLIGATIONS FOR REAL ESTATE CAPITALIZATION CONTRACTS ON GOODS UNDER CONSTRUCTION
2504.10	INTEREST PAYABLE ON INDIVIDUAL CAPITALIZATION

38. Replace the description of account 2504 "Miscellaneous Accounts Payable", with the following:

"This account records obligations with commercial establishments that have presented for collection notes for consumption with credit cards issued by the company that have not yet been paid, amounts payable originating from insurance collected on behalf of borrowers, withholdings for factory declaration, guarantees for rentals and share subscriptions. It also includes installments payable (equivalent to the value of the good) for contracts of goods received in financial leasing, as well as the obligations of the ECI for real estate capitalization contracts entered into on goods under construction and the interest payable agreed for the individual capitalization of clients."

39. Incorporate as a debit in the dynamics of accounts 2504, 2505, 2506 and 2507, the following:

"- For the transfer of goods under construction subject to real estate capitalization contracts, at the completion of the works."

40. Incorporate as a credit in the dynamics of accounts 2504, 2505, 2506 and 2507, the following:

"- For the obligations derived from the real estate capitalization contracts entered into."

41. Incorporate into account 2603 "Debts and Obligations with Companies of the Country's Financial System", the following subaccount:

2603.05	DEBTS FOR GOODS RECEIVED IN REAL ESTATE CAPITALIZATION

42. Replace the first paragraph of the description of item 27 "Provisions", with the following:

"Comprises the provisions for contingencies that the company establishes affecting the result of the year, but whose payment or settlement will be made in the following year or years. It also includes provisions for country risk in accordance with the rules that the Superintendency of Banking and Insurance has established on the matter, and provisions for impairment of goods placed in real estate capitalization in accordance with the provisions of the ECI Regulations."

43. Incorporate into account 2702 "Other Provisions", the following subaccount:

2702.06	PROVISIONS FOR IMPAIRMENT OF GOODS PLACED IN REAL ESTATE CAPITALIZATION

44. Replace the description of account 2702 "Other Provisions", with the following:

"This account records the provisions for possible losses or eventual obligations that may arise from the management of different risks in the company, in accordance with the policies established by the company and with the rules that the Superintendency of Banking and Insurance may provide on the matter. It includes provisions for litigation, claims, assessments, for hedging mechanisms through trusts, country risk, impairment of goods placed in real estate capitalization in accordance with the provisions of the ECI Regulations and miscellaneous contingencies."

45. Incorporate as a credit in the dynamics of accounts 2701 and 2702, the following:

"- For the establishment of provisions for impairment of goods placed in real estate capitalization."

46. Replace the first paragraph of the description of item 29 "Other Liabilities", with the following:

"Comprises deferred income whose realization will be made in the following year or years and the accounts to record operations of a transitory nature such as cash overages, goods transferred in financial leasing, goods transferred in real estate capitalization and operations in process."

47. Replace the name of account 2907, with the following: "Contra Account for Goods Transferred in Financial Leasing and in Real Estate Capitalization".

48. Replace the name of subaccount 2907.01, with the following: "Properties Transferred in Financial Leasing and Real Estate Capitalization".

49. Incorporate into subaccount 2907.01, the following analytical accounts:

2907.01.01	PROPERTIES TRANSFERRED UNDER FINANCIAL LEASE

2907.01.02 PROPERTIES TRANSFERRED UNDER CAPITALIZATION
REAL ESTATE

50. Replace the first and second paragraphs of the description of account 2907, with the following:

"This account records the cost and depreciation of those assets granted under financial lease and real estate capitalization. The dynamics of this contra-account is in the opposite direction to the dynamics of asset account 1808 and the corresponding subaccounts."

51. Replace the debit and the first credit of the dynamics of account 2907, with the following:

"DEBITS: - For the depreciation corresponding to the fiscal year with credit to subaccounts 4401.08 "Depreciation of Properties Transferred under Financial Lease" and 4401.10 "Depreciation of Properties Transferred under Real Estate Capitalization".

CREDITS: - For the amount of the properties transferred under financial lease and real estate capitalization with charge to the corresponding analytical accounts of item 14 "Credits".

52. Replace the first paragraph of the description of item 38 "Accumulated Results", with the following:

"It comprises the accumulated undistributed profits and/or accumulated losses. Likewise, provisions for losses due to fluctuation in value of the portfolio of investments available for sale shall be recorded, in accordance with the Regulation for Classification, Valuation and Provisions of Investments of Companies of the Financial System. It also comprises provisions for impairment of properties placed in real estate capitalization. The results of the fiscal year may only be transferred to the respective accounts of this item at the beginning of the following fiscal year."

53. Replace the description of account 3802 "(Accumulated Loss)", with the following:

"This account records the accumulated losses that have not been absorbed or covered. Likewise, provisions for losses due to fluctuation in value of the portfolio of investments available for sale are recorded, in accordance with the Regulation for Classification, Valuation and Provisions of Investments of Companies of the Financial System. It also comprises provisions for impairment of properties placed in real estate capitalization according to the provisions of the ECI Regulation."

54. Add to account 3802, the following subaccount:

3802.03
PROVISION FOR IMPAIRMENT OF PROPERTIES
PLACED IN REAL ESTATE CAPITALIZATION

55. Add as description of subaccount 3802.03, the following:

"This subaccount records the provisions that the ECI must constitute for the amount by which the difference between the market price of the properties at the time of entering into the real estate capitalization contracts and their market values exceeds the amount of the accumulated individual capitalizations. Its counterpart is subaccount 2702.06 "Provisions for Impairment of Properties Placed in Real Estate Capitalization". The amount to be recorded in this subaccount must be recalculated each month. The balance of this subaccount may not be offset against accumulated profits."

56. Add as debit in the dynamics of accounts 3801 and 3802, the following:

"- For the constitution of provisions for impairment of properties placed in real estate capitalization.

57. Add as credit in the dynamics of accounts 3801 and 3802, the following:

"- For the reversal of excess provisions constituted for the impairment of properties placed in real estate capitalization."

58. Replace the first paragraph of the description of class 4 "Expenses", with the following:

"It groups the accounts that represent financial expenses, expenses for financial services, provisions for impairment, provisions for uncollectibility, depreciation of realizable assets, received in payment and foreclosed, depreciation of real estate, furniture and equipment and amortizations, administration expenses and cost of sales; the same that shall be recorded as they are incurred or occur, regardless of the date and form of payment."

59. Add to account 4109 "Miscellaneous Financial Charges", the following subaccount:

4109.20	INTEREST PAYABLE ON INDIVIDUAL CAPITALIZATION

60. Replace the denomination of item 43, with the following: "Provisions for Impairment, Provisions for Uncollectibility and Depreciations of Realizable Assets, Received in Payment and Foreclosed".

61. Replace the description of item 43, with the following:

"It comprises charges for provisions for impairment of investments in securities and titles, uncollectibility of credits and accounts receivable, impairment of realizable assets, received in payment, foreclosed, assets out of use, country risk and contingencies; as well as charges for depreciations of realizable assets, received in payment and foreclosed related to real estate capitalization contracts."

62. Replace the denomination of account 4304, as well as of subaccounts 4304.01 and 4304.02, with the following: "(Provisions and Depreciations for Realizable Assets, Received in Payment, Foreclosed and Assets Out of Use)", "(Provision and Depreciation for Realizable Assets)" and "(Provision and Depreciation for Assets Received in Payment and Foreclosed)", respectively.

63. Add to subaccounts 4304.01 and 4304.02, the following analytical accounts:

4304.01.01	PROVISION FOR REALIZABLE ASSETS
4304.01.02	DEPRECIATION FOR REALIZABLE ASSETS
4304.02.01	PROVISION FOR ASSETS RECEIVED IN PAYMENT AND FORECLOSED
4304.02.02	DEPRECIATION FOR ASSETS RECEIVED IN PAYMENT AND FORECLOSED

64. Replace the description of account 4304, with the following:

"This account records the charges for depreciations and provisions for impairment of realizable assets, received in payment and foreclosed, as well as assets out of use."

65. Add to account 4401 "Depreciation of Real Estate, Furniture and Equipment", the following subaccounts:

4401.06	DEPRECIATION OF ASSETS RECEIVED IN REAL ESTATE CAPITALIZATION
4401.10	DEPRECIATION OF ASSETS TRANSFERRED IN REAL ESTATE CAPITALIZATION
4401.11	(DEPRECIATION BY CONTRA OF ASSETS TRANSFERRED IN REAL ESTATE CAPITALIZATION)

66. Replace the last credit of the dynamics of accounts 4401 and 4403, with the following:

"CREDITS: - For the reimbursement of the depreciation of assets in financial leasing and in real estate capitalization contracts with debit to account 2907."

67. Add to subaccount 5105.07 "Income from Various Accounts Receivable", the following analytical account:

5105.07.06	RIGHT OF USE OF REAL ESTATE AND OTHER ACCOUNTS RECEIVABLE FROM CLIENTS FOR REAL ESTATE CAPITALIZATION CONTRACTS

68. Add as fourth paragraph of the description of account 8404 "Guarantees Received for Credit Operations", the following:

"Likewise, for provisioning purposes, the assets granted in real estate capitalization contracts are considered as preferred guarantees, in compliance with the ECI Regulations, so such assets shall be recorded in analytical account 8404.02.20."

69. Add to subaccount 8404.02 "Other Preferred Guarantees", the following analytical account:

8404.02.20	ASSETS GRANTED IN REAL ESTATE CAPITALIZATION

70. Add to account 8409 "Other Credit Control Accounts", the following subaccount:

8409.12	INDIVIDUAL CAPITALIZATION OF CLIENTS IN REAL ESTATE CAPITALIZATION CONTRACTS

71. Replace the description of account 8409 "Other Credit Control Accounts", with the following:

"This account includes the registration subaccounts intended for the internal control of the company, at the corresponding value, on the assets sold for delivery, contracted insurance, safe deposit boxes, financial instruments derived from interest rates, securities in circulation and subordinated debt-encaje, purchase and sale orders of securities, commodities and financial instruments derived based on contracts made on behalf of third parties, as well as on the individual capitalization that clients make in real estate capitalization contracts."

72. Add to the debits and credits of the dynamics of account 8409 "Other Credit Control Accounts", the following:

"DEBITS - For the amount of the individual capitalization applied to the payment of the cash price of the real estate in real estate capitalization contracts.

• For the amount of the individual capitalization recovered by clients through assignment of their contractual position in real estate capitalization contracts.

CREDITS:

• For the contributions to the individual capitalization made by clients in
  the real estate capitalization contracts."

III. Amend Chapter V "Annexes and Reports to the Financial Statements" of the Accounting Manual, according to the following:

1. The changes of denominations of accounts, subaccounts and analytical accounts made in Chapters III "Chart of Accounts" and IV "Description and Dynamics of Accounts" of the Accounting Manual, are also applicable to the Annexes and Reports contained in Chapter V of the same Manual that include them.

2. In the Annexes and Reports contained in Chapter V of the Accounting Manual, it must be understood that any reference to credits also incorporates real estate capitalization contracts

3. Amend the list of Accounting Accounts Considered in the RCD, in the following terms:

	Accounting Account Code
Class	Item	Account	Subaccount	Analytical Account	Analytical Subaccount
1 dig.	2 dig.	4 dig.	6 dig.	8 dig.	10 dig.
1	15	1507	1507.05	All
1	15	1507	1507.06
1	15	1509	1509.07	1509.07.05
1	16	1609	1609.01	All
1	16	1609	1609.02	All
8	84	8404	8404.02	8404.02.20

4. Report No. 2 Annex A “Contingent Assets and Credits Weighted by Risk”:

4.1 Amend the name of item 1 of section IV Assets with 50% Risk - Factor 0.5 to the following: “Assets granted under financial leasing or real estate capitalization, in contracts of normal compliance”.

4.2 Add to item 1 of section IV Assets with 50% Risk - Factor 0.5 the following:

Name	Observations
IV. ASSETS WITH 50% RISK - Factor 0.5
1) Assets granted under financial leasing or real estate capitalization, in contracts of normal compliance	Real Estate Capitalization Contracts of normal compliance

4.3 Add to item 2 of section V Assets with 100% Risk, the following:

Name	Observations
V. ASSETS WITH 100% RISK
2) Credits in General, except those cited in articles 189° to 192° and Subordinated Loans
Less:
Real Estate Capitalization Contracts of normal compliance

4.4 Amend item 7 of section V Assets with 100% Risk, in the following terms:

Name	Observations
V. ASSETS WITH 100% RISK
7) Fixed Assets
Real Estate, Furniture and Equipment	Does not include assets under financial leasing, nor under real estate capitalization

5. Amend the part of Report No. 3 “Effective Equity Adjusted for Inflation” referring to account 3802, according to the following:

ACCOUNTS OF THE ACCOUNTING MANUAL	Name	AMOUNT S/.	COMMENTS - OBSERVATIONS
Less: 3802	(Accumulated Losses)		Includes the loss from fluctuation in value for Negotiable Investments Available for Sale in accordance with the Regulation for Classification, Valuation and Provisions of Investments of Companies of the Financial System. It also includes provisions for impairment of assets placed in real estate capitalization as provided in the ECI Regulation.

ANNEX 2

ANNEX No. 25

ASSETS FOR PLACEMENT, RECEIVED IN PAYMENT, ADJUDICATED AND RESTITUTED

Company:......................................................................
Information as of: ...................................................

Description of the Asset	Acquisition, Completion of Construction, Receipt in Payment, Adjudication or Restitution	Net book value at the reporting date	Depreciation and Provision for Assets for Placement, Received in Payment, Adjudicated or Restituted
(a)	Origin (b)	Date	Value of Acquisition, Construction, Receipt in Payment, Adjudication or Restitution	(c)	Depreciation Constituted Monthly (d)	Provision for impairment (e)	Valuation (f)
							Date	Value

[a] Record the description of the asset, also indicating an “I” if it is real estate.

[b] Record the letter “C” in the case of assets for placement, “P” in the case of receipt in payment, “A” in the case of award and “R” in the case of returned assets.

[c] Record the net book value.

[d] Record the accumulated amount of the depreciation constituted monthly. Take into account that only real estate is depreciated, excluding land.

[e] Record the provision constituted by the excess of the net depreciation value of the asset over its net realizable value.

[f] Record the valuation date and the net realizable value of the asset.

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GENERAL MANAGER
GENERAL ACCOUNTANT
PREPARED BY

ANNEX 3

ANNEX No. 26

ASSETS PLACED IN REAL ESTATE CAPITALIZATION

Company:......................................................................
Information as of: ...................................................

Description of the Asset ( a )	Placement in Real Estate Capitalization	Valuation	Loss of Value of the Asset ( f = c – e )	Accumulated Amount of Individual Capitalization	Provision ( h = f - g )
	Date ( b )	Cash Price ( c )	Date ( d )	Value ( e )	(g )

[a] Record the description of the asset.

[b] Date on which the real estate capitalization contract is entered into.

[c] Market price of the asset at the time of entering into the real estate capitalization contract, in accordance with the provisions of subsection g) of article 1 of Law No. 28364.

[d] Record the valuation date of the asset.

[e] Record the net realizable value of the asset.

[h] Provision to be constituted in application of the provisions of the penultimate paragraph of article 16 of the ECI Regulations.

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GENERAL MANAGER
GENERAL ACCOUNTANT
PREPARED BY