Resolution 038/99

BOARD RESOLUTION NO. 038/99
SUBJECT: FINANCIAL SYSTEM – AUTHORIZES THE ADMINISTRATION TO COVER THE OVERDRAFT IN THE CURRENT ACCOUNT AND THE USE OF FUNDS IN CUSTODY FOR THE LEGAL RESERVE OF THE BBA.

HAVING SEEN:
Law No. 1670 of the Central Bank of Bolivia dated October 31, 1995.
Law No. 1977 dated May 14, 1999.
Notes from the Central Bank of Bolivia PRES. No. 132/99 and No. 133/99 dated May 14, 1999.
Resolution SB No. 053/99 of the Superintendency of Banks and Financial Entities (SBEF), dated May 14, 1999.
Note from the Superintendency of Banks and Financial Entities SB/ISB/Document 19743 dated May 14, 1999.

CONSIDERING:
That the Central Bank of Bolivia is the sole monetary authority and payments system authority of the country.
That the Banco Boliviano Americano S.A. (BBA) has not been able to complete its portfolio in guarantee to access new disbursements of the liquidity credit dated May 11, 1999. That the Check Clearing House of the date resulted against said financial entity in Bs3,561,384.32 and $US4,135,275.63, causing an overdraft in its Current Account of Bs739,114.41 and $US3,555,247.66.

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That on May 14, 1999, charged against its Legal Reserve Account La Paz, the BBA withdrew funds in custody from correspondent banks in Santa Cruz, for $US2,200,000, and from Oruro for $US200,000. That due to the insufficiency of funds in the current and legal reserve accounts of the BBA, the Central Bank of Bolivia determined the cessation of payments of said financial entity, an aspect communicated to the SBEF. That by Resolution SB No. 053/99 of May 14, 1999, the SBEF has taken possession of Banco Boliviano Americano S.A. with the objective of proceeding to its forced sale, requesting assistance from the CBB, in accordance with Article Three of Law 1977, for the stated purpose. That in order to ensure the normal functioning of the country's payments system and in response to the request of the Superintendency of Banks and Financial Entities SB/ISB/Document 19743, it has been deemed convenient to authorize the Administration to cover the overdraft in the Current Account and the use of Custodial Funds for Legal Reserve of the BBA.

THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Authorize the Administration, on an exceptional basis and in order to safeguard the country's payments system, in application of what is provided in Article Three of Law 1977 and in attention to the request of the Superintendency of Banks and Financial Entities SB/ISB/Document 19743, to cover the overdraft in the Current Account and the use of Custodial Funds for Legal Reserve of Banco Boliviano Americano S.A.

Article 2.- Authorize, for the purpose stated in Article 1, the disbursement in the Current Account of the BBA of $US6,083,789.30, charged against a receivable account to said intervened bank for its forced sale, which will be opened for this purpose at the CBB.

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Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, May 14, 1999

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Juan Antonio Morales A.

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Armando Pinell S.

Jaime Ponce G.

Juan Medinaceli

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Fernando Campero P.

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Armando Méndez M.