Regulatory Alerts2017-09-19 | CD-SIBOIF-1016-1-SEP19-2017Added · Updated
Regulation on the Establishment of Countercyclical Provisions
The Superintendence of Banks and Other Financial Institutions requires banks, financial companies, and foreign bank branches in Nicaragua to establish an initial countercyclical provisions fund over a four-year period. The fund amount is calculated using a formula based on 2016 latent losses and historical provision-to-portfolio ratios, with monthly contributions prorated by the regulator. Financial institutions may only utilize this fund to increase specific provisions for classified portfolios B through E when real quarterly GDP growth falls below its historical average. The regulation also mandates specific accounting treatments for the fund and authorizes the Superintendent to impose sanctions for unauthorized use or grant special application adjustments.