Regulation Reforming Articles 5, 14, and 15, and Annex 1 of the Regulation on Financing Granted by General Warehouses and Assets Acquired in Recovery

Resolution No. CD-SIBOIF-830-2-ABR11-2014 Dated April 11, 2014

REGULATION REFORMING ARTICLES 5, 14, AND 15, AND ANNEX 1 OF THE REGULATION ON FINANCING GRANTED BY GENERAL WAREHOUSES AND ASSETS ACQUIRED IN RECOVERY

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

CONSIDERING

I

That on May 11, 2011, the Regulation on Financing Granted by General Warehouses and Assets Acquired in Recovery was approved, contained in Resolution No. CD-SIBOIF-676-2-MAY11-2011, published in La Gaceta, Official Gazette No. 131, of July 14, 2011.

II

That it is necessary to reform Articles 5, 14, and 15 of the aforementioned regulation, for the following purposes: i) to determine in which special cases the General Warehouse must provision documented credits before their maturity; and ii) to adjust the scope and valuation criteria of real estate assets adjudicated to General Warehouses through the recovery of granted financing, in accordance with International Accounting Standard (IAS) 16 and the operational reality of the warehousing industry.

III

That it is also necessary to modify Annex 1 of the aforementioned regulation, in order to clarify the information that General Warehouses must request from their debtors regarding the financing they grant.

IV

That based on the authority conferred by Articles 2, 51, and 139 of Law No. 734, General Warehouse Law, published in La Gaceta, Official Gazette No. 201, of October 21, 2010; and Article 2, fourth paragraph, Article 3, numeral 13), and Article 10, numeral 1) of Law 316, Law of the Superintendence of Banks and Other Financial Institutions, published in La Gaceta, Official Gazette No. 196 of October 14, 1999, and its reforms.

In exercise of its powers,

HAS ISSUED

The following:

CD-SIBOIF-830-2-ABR11-2014

REGULATION REFORMING ARTICLES 5, 14, AND 15, AND ANNEX 1 OF THE REGULATION ON FINANCING GRANTED BY GENERAL WAREHOUSES AND ASSETS ACQUIRED IN RECOVERY

FIRST: Articles 5, 14, and 15, and Annex 1 of the Regulation on Financing Granted by General Warehouses and Assets Acquired in Recovery, contained in Resolution No. CD-SIBOIF-676-2-MAY11-2011, published in La Gaceta, Official Gazette No. 131, of July 14, 2011, are hereby reformed, to read as follows:

"Art. 5. Provisions for documented credits.- Overdue documented credits that have not been converted into credits covered by Deposit Certificates and Pledge Bonds within the timeframe established in the previous article, must be provisioned at one hundred percent (100%).

Notwithstanding the foregoing, balances of clients who have been declared judicially insolvent, in bankruptcy proceedings, or bankrupt, or with an unknown domicile in the country, must be provisioned at 100% before the scheduled time; in the latter case, supported by the corresponding legal opinion. Their regularization may be immediate or at the latest in the period established in Article 6 of this regulation.

Art. 14. Scope of evaluation.- Adjudicated assets shall be evaluated in their entirety at least once every three years for real estate, and for movable assets with a semi-annual periodicity.

For the purposes of this regulation, adjudicated assets are understood to be those acquired via judicial or extrajudicial means for the recovery of credit obligations.

Art. 15. Criteria for evaluation.- Adjudicated merchandise shall be valued in accordance with the analysis and documentation criteria referred to in the regulations governing the operational and financial matters of general warehouses.

In the case of adjudicated real estate, the evaluation of such assets must be performed based on the estimated realization value in accordance with the regulations governing appraisers who provide services to institutions of the Financial System. All real estate assets whose book value in national currency or foreign currency exceeds the equivalent in cordobas of twenty-five thousand United States dollars (US$25,000.00) at the official exchange rate, must have valuations performed by independent appraisers registered with the Warehouse, duly registered in the Register of Appraisers of the Superintendence of Banks, with the exception of assets located outside the country.

The evaluation of shares and rights in companies and, in general, of financial instruments that have been received in payment in kind or adjudicated, shall be carried out in accordance with the criteria defined in the regulations governing appraisers who provide services to institutions of the Financial System.

ANNEX 1

LEGAL AND ECONOMIC INFORMATION OF THE

DEBTOR

In all cases of loans granted by the warehouse, the credit proposal submitted to the corresponding decision-making instances, as well as the resolution stating the conditions required by said instance, must exist in the respective file.

A. Natural Persons:

1. Credit application.
2. General information (name, marital status, occupation, Identity Card, domicile, telephone).
3. Activity.
4. Business registration and RUC number, where applicable.
5. Balance Sheet and Income Statement when required by the warehouse.
6. Valuation made by the Warehouse of the goods or merchandise received as collateral when appropriate.
7. Document containing the approval of the credit by the corresponding decision-making instance.

B. Legal Entities:

1. Credit application.
2. Deed of incorporation and bylaws of the Company.
3. Document accrediting legal representation.
4. Business registration and RUC number.
5. Valuation made by the Warehouse of the goods or merchandise received as collateral when appropriate, and
6. Document containing the approval of the credit by the corresponding decision-making instance."

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

(f) Gabriel Pasos Lacayo (f) V. Urcuyo V. (f) F. Reyes B. (f) illegible (Silvio Moisés Casco Marenco) (f) illegible (Freddy Blandón Argeñal) (f) U. Cerna B. Secretary.

URIEL CERNA BARQUERO

Secretary of the Board of Directors SIBOIF