Regulatory Alerts1998-02-27 | Resolución 020/98Added · Updated
Resolution 020/98
The Board of Directors of the Central Bank of Bolivia approves the partial subrogation of deposits exceeding $5,000 held at BIDESA in liquidation for accounts established before October 31, 1997. The Central Bank acquires depositors' rights by issuing Deposit Return Certificates (CDDs) structured in ascending tiers based on deposit amounts, with maturity periods ranging from two to four and a half years. Deposits exceeding $200,000 receive partial payment via CDDs, while the remaining 50% of the excess amount is retained as a claim against the liquidation process. Depositors must formally assign their rights to the Liquidator to receive these instruments, and pledged deposits are only subrogated after the underlying credit obligations are fully settled.
BOARD RESOLUTION NO. 020/98 SUBJECT: FINANCIAL SYSTEM - APPROVES PARTIAL SUBROGATION OF DEPOSITS GREATER THAN $US 5,000 OF BIDESA IN LIQUIDATION.
SEEN: The Law of Banks and Financial Entities No. 1488 of April 14, 1993. The Law of the Central Bank of Bolivia No. 1670 of October 31, 1995. The Resolution of the Superintendence of Banks and Financial Entities No. SB/143/97 of December 12, 1997. The Board Resolution No. 170/97 dated December 13, 1997. The Report of the Financial System Management GSF 025/98 of March 3, 1998. The Report of the Economic Policy Advisory APEC-ARMYF No. 032/98 of March 3, 1998. The Report of the Legal Advisory ALEG 072/98 of March 3, 1998.
CONSIDERING: That by Board Resolution No. 170/97, the BCB decided to partially subrogate the rights of the depositors of the Banco Internacional de Desarrollo S.A. (BIDESA) in liquidation, up to a maximum amount per depositor equivalent to $US 5,000, to be paid in cash in the originally agreed currency.
That to strengthen the stability of the financial system, without neglecting the main object of the BCB, it has been deemed appropriate to expand the subrogation of BIDESA deposits in liquidation as provided in Board Resolution No. 170/97.
That at the request of the Board, the Financial System Management has analyzed various alternatives to expand the subrogation of deposits, suggesting the application of a tiered return mechanism based on the issuance of CDDs by the BCB.
That the report of the Economic Policy Advisory foresees the expansive impact of the subrogation of these claims, under the suggested modality, only from the year 2000 onwards, which may be attenuated to the extent that there are recoveries of assets from BIDESA in liquidation.
That in the opinion of the Legal Advisory, the Board has full powers to expand the determination adopted in Resolution No. 170/97.
THEREFORE, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:
Article 1.- Approve the partial subrogation of deposits greater than $US 5,000 constituted in BIDESA prior to October 31, 1997, complementing what is provided in Resolution No. 170/97, to which effect the BCB will acquire the rights of the depositors with Deposit Return Certificates (CDDs).
Article 2.- The amount of this subrogation in no case may be greater than the claim registered within the legal deadline before the Liquidating Intendant, minus the $US 5,000 that were subrogated in cash.
Article 3.- The BCB Board will expressly authorize the subrogation of deposits constituted in BIDESA after October 31, 1997, after a special review and qualification "without observations" by the Liquidating Intendant.
Article 4.- The deposits subrogated by the BCB will be compensated in ascending tiers according to the following table:
Tier Amount ($US) Instrument Maturity Period
- from 5,001 to 30,000 CDDs 2 years
- from 30,001 to 100,000 CDDs 3 years
- from 100,001 to 200,000 CDDs 4 years
- from 200,001 onwards 50% in CDDs 4 and a half years 50% according to liquidation recoveries
In accordance with the above principle: a) A deposit greater than $US 5,000 but less than or equal to $US 30,000, receives CDDs in the following term and amount: To two years, for the amount exceeding $US 5,000 (tier 1). b) A deposit greater than $US 30,000 but less than or equal to $US 100,000, receives CDDs in the following terms and amounts: To two years, for the amount of $US 25,000 (tier 1), and To three years, for the amount exceeding $US 30,000 (tier 2). c) A deposit greater than $US 100,000 but less than or equal to $US 200,000, receives CDDs in the following terms and amounts: To two years, for the amount of $US 25,000 (tier 1); To three years, for the amount of $US 70,000 (tier 2), and To four years, for the amount exceeding $US 100,000 (tier 3). d) A deposit greater than $US 200,000 receives CDDs in the following terms and amounts:
To two years, for the amount of $US 25,000 (tier 1); To three years, for the amount of $US 70,000 (tier 2); To four years, for the amount of $US 100,000 (tier 3), and To four and a half years, for 50% of the amount exceeding $US 200,000 (tier 4). The remaining 50% of the amount exceeding $US 200,000, will be maintained as a claim against BIDESA in liquidation and will be cancelled according to the recoveries of the liquidation.
Article 5.- It will be the responsibility of the Liquidating Intendant to qualify and consolidate the deposits, based on the claims accredited within the legal deadline, following the criteria established in Article 5 of Board Resolution No. 170/97.
Article 6.- The CDDs may be redeemed early with the cash recoveries that BIDESA in liquidation delivers to the BCB. Early redemption of a CDD is understood as the purchase of that title by the BCB prior to its maturity date, in cash, at the value resulting from the auction called for such effect by the Central Bank of Bolivia.
Article 7.- Deposits left as pledge as guarantee for credits in BIDESA, will only be subrogated by the BCB once the principal obligations have been fully settled.
Article 8.- The depositors and savers of BIDESA must appear before the Liquidating Intendancy where they will fill out and sign the attached document named "Assignment of Rights for Restitution and Payment with Deposit Return Certificates", on whose basis the BCB will issue the respective CDDs according to the Regulation that it will dictate for such effect.
Article 9.- The Presidency and the General Management are entrusted with the execution and compliance of this Resolution.
La Paz, March 3, 1998
Juan Antonio Morales A.
Armando Pinell S. Jaime Ponce G. Juan Medinacelli V.
Fernando Campero P. Juan Pablo Zegarra A.
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