Resolution 042/2003

BOARD RESOLUTION NO. 042/2003 SUBJECT: FINANCIAL ENTITIES MANAGEMENT – APPROVES DISBURSEMENT OF FINANCIAL SUPPORT FOR THE SOLUTION PROCESS OF MUTUAL LA FRONTERA.

SEEN: Law 1670 of October 31, 1995. Law 1488 of April 14, 1993, Codified by Supreme Decree 26851 of April 3, 2002. Law 2297 on Strengthening Financial Norms and Supervision of December 20, 2001. Supreme Decree 27025 of May 6, 2003. Resolution of the Superintendency of Banks and Financial Entities, SB No. 43/2003 of May 8, 2003, which orders the intervention of Mutual La Frontera with the objective of applying the solution procedures or forced judicial liquidation. Note from the Superintendency of Banks and Financial Entities SB/ and SL/D- 27863/2003, File No. 84586, of May 9, 2003, requesting support for the solution process of Mutual La Frontera. Report from the Financial Entities Management GEF No. 133./2003 of May 9, 2003. Report from the Legal Affairs Management SANO No. 088./2003 of May 9, 2003.

CONSIDERING: That through Resolution SB No. 43/2003, the Superintendency of Banks and Financial Entities, in application of article 120 paragraph a) of Law 1488, has ordered the intervention of Mutual La Frontera with the objective of applying the //2. B.D. No. 042/2003 solution procedure or forced judicial liquidation.

That article 125 of Law 1488 establishes that to successfully carry out the solution procedure, the Financial Restructuring Fund (FRF) will support with one or a combination, of the following mechanisms at the discretion of the Superintendency: a) In case of direct transfer of the intervened entity in favor of financial intermediation entities, the FRF will constitute a guarantee of up to 20% of the value of the transferred assets. b) Cash contributions or bonds to the trust mentioned in paragraph d) of article 124 of Law 1488 in exchange for a subordinated participation. c) Firm purchase of the first-order participations mentioned in paragraph a) of article 124 of the aforementioned law.

That article 125 of Law 1488 in its fifth paragraph states that the support mechanisms at the expense of the FRF will be carried out by the Central Bank of Bolivia, whose total contribution cannot exceed fifty percent (50%) of the privileged obligations of the intervened financial intermediation entity.

That article 25 of Law 2297 establishes that as long as the Financial Restructuring Fund (FRF) is not operational, the support granted by the Central Bank of Bolivia to the solution procedures will be compensated by the General Treasury of the Nation through the issuance of long-term bonds, according to an agreement signed between the Ministry of Finance and the Central Bank of Bolivia.

That article 3 of Supreme Decree 27025 authorizes the General Treasury of the Nation to support, through the Central Bank of Bolivia, the intervention of non-banking financial entities when they do not have sufficient liquid assets to cover intervention expenses and liquidity deficiency to make viable the solution procedure. Likewise, that at the request of the Superintendency of Banks and Financial Entities, the Central Bank of Bolivia on behalf of the General Treasury of the Nation will disburse said resources in the currency requested, in favor of the intervened entity.

That the Superintendency of Banks and Financial Entities, through note SB/ and SL/ D- 27863/2003, in application of article 125 of Law 1488 and article 3 of Supreme Decree 27025, has requested from the Central Bank of Bolivia the sum of $US 623,520.80 and Bs 571,950.00, in cash, for support for the solution process //3. B.D. No. 042/2003 of Mutual La Frontera.

That the Financial Entities Management in its Report GEF No. 133/2003 states that the amounts requested by the SBEF for support for the solution process are within the limits established in article 125 of Law 1488 and article 3 of Supreme Decree 27025, therefore recommending to the Board of Directors the consideration of the aforementioned request.

That the Legal Affairs Management, in its report SANO No. 088/2003, states that the SBEF request is framed within current legal norms, therefore the Board of Directors of the Issuing Entity has competence to approve the disbursement of the resources required by it in order to support and make viable the solution process of the “Savings and Loan Association Mutual La Frontera”, corresponding to the Board of Directors to authorize Mr. President of the BCB the signing of a Contract with the TGN for the compensation of the support given, through bonds.

THEREFORE, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES: Article 1.- At the request of the Superintendency of Banks and Financial Entities, authorize, on behalf of the General Treasury of the Nation, the disbursement in favor of the Savings and Loan Association Mutual La Frontera Intervened Entity, of $US 553,576.86 corresponding to 50% of the privileged obligations provided for in article 125 of Law 1488, for the support for the solution process of the intervened Mutual La Frontera for its solution. Article 2.- At the request of the Superintendency of Banks and Financial Entities, authorize, on behalf of the General Treasury of the Nation, the disbursement in favor of the Savings and Loan Association Mutual La Frontera Intervened Entity, of $US 69,943.94 to cover liquidity deficiencies to make viable the solution procedure and Bs 571,950.00 to cover intervention expenses contemplated in article 3 of Supreme Decree 27025.

Article 3.- Authorize the President of the Institution to sign, with the Minister of Finance, the Agreement by means of which the compensation is carried out in bonds for a term of ten (10) years, of the disbursements determined in Articles 1 and 2 of this Resolution, and under the terms and conditions established in Supreme Decree 27025. //4. B.D. No. 042/2003 Article 4.- The Presidency and the General Management are in charge of the execution and compliance of this resolution.

La Paz, May 9, 2003

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Juan Antonio Morales A.

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Juan Medinaceli V. Armando Méndez M.

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Enrique Ackermann A.