Regulatory Alerts1999-07-06 | Resolución 056/99Added · Updated
Resolution 056/99: Modifications to the Regulation for the Authorization of Banks as Accredited Financial Entities (EFA)
The Board of Directors of the Central Bank of Bolivia amends the Regulation for the Authorization of Banks as Accredited Financial Entities (EFA) to remove the requirement for open market operations with the BCB to hold EFA status and deletes the definition of such operations. The resolution updates eligibility criteria by replacing a debt limit with a compliance requirement for the ALADI Reciprocal Payments and Credits Agreement and introduces a compensation table allowing banks with delinquent portfolios exceeding 12% to offset the excess by maintaining lower net delinquency provisions. Additionally, the text removes references to the BCB's Currency and Credit Management in suspension notifications and eliminates Articles 13 and 14 of the original regulation, with changes taking effect on August 1, 1999.
BOARD RESOLUTION NO. 056/99 SUBJECT: FINANCIAL SYSTEM – MODIFICATIONS TO THE REGULATION FOR THE AUTHORIZATION OF BANKS AS ACCREDITED FINANCIAL ENTITIES (EFA).
VIEWING: Central Bank of Bolivia Law No. 1670 of October 31, 1995. Bank and Financial Entities Law No. 1488 of April 14, 1993, and its subsequent modifications.
Regulation for the Authorization of Banks as Accredited Financial Entities, approved by Board Resolution No. 117/97 of June 10, 1997. Internal Regulation for Channeling Operations through the ALADI Reciprocal Payments and Credits Agreement, approved by Board Resolution No. 165/97 of November 25, 1997. Regulation for the Capital Adequacy of Financial Intermediation Entities and the Risk Weighting of Their Assets and Contingencies, approved by Board Resolution No. 143/97 of July 19, 1997. Report from the Financial System Management No. 115/99 of July 5, 1999. Report from the Legal Advisory Office ALEG No. 041/99 of July 5, 1999.
CONSIDERING: That it has been deemed appropriate for banks to conduct open market operations with the BCB without needing to be authorized as EFA.
That Board Resolution No. 165/97 regulates the foreign trade operations of banking entities under the ALADI Reciprocal Payments and Credits Agreement.
That the Regulation for the Authorization of Banks as EFA must be compatible with the norms and operations of the ALADI Reciprocal Payments and Credits Agreement, in order to guarantee compliance with the obligations arising from these operations.
That the Financial System Management, in its Report No. 115/99, recommends the approval of the proposed modifications to the Regulation for the Authorization of Banks as Accredited Financial Entities (EFA).
That in the opinion of the Legal Advisory, the Board is legally empowered to approve the suggested modifications to the aforementioned Regulation.
THEREFORE, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:
Article 1.- Modify the following articles of the Regulation for the Authorization of Banks as Accredited Financial Entities (EFA), approved by Board Resolution No. 117/97:
SAYS: Article 1 (Object). This Regulation establishes the norms, requirements, criteria, and procedures to authorize Banks as Accredited Financial Entities (EFA). This authorization will allow Banks to operate with the instruments of the ALADI Reciprocal Payments and Credits Agreement and with qualified open market operations.
SHOULD SAY: “Article 1 (Object). This Regulation establishes the norms, requirements, criteria, and procedures to authorize Banks as Accredited Financial Entities (EFA). This authorization will allow Banks to operate with the instruments of the ALADI Reciprocal Payments and Credits Agreement.”
SAYS: Article 2 (Definitions) For the purposes of this Regulation, the following abbreviations and definitions will be used: BCB: Central Bank of Bolivia. GSF: Financial System Management of the BCB. SBEF: Superintendence of Banks and Financial Entities. BANK: Financial Entity with a license to operate issued by the SBEF, to operate as a Bank.
NET EQUITY: Is the Net Equity defined by SBEF Resolution No. 127/96 of December 20, 1996 and/or subsequent modifications.
CPCR-ALADI: ALADI Reciprocal Payments and Credits Agreement. System for compensating debtor and creditor balances of banking operations carried out between the member countries of said Organization.
QUALIFIED OPEN MARKET OPERATIONS: Are Active Repo Operations, Currency Swaps, and others that will be qualified subsequently by the BCB Board through an express resolution.
SHOULD SAY: “Article 2 (Definitions) For the purposes of this Regulation, the following abbreviations and definitions will be used:
BCB: Central Bank of Bolivia. GSF: Financial System Management of the BCB. SBEF: Superintendence of Banks and Financial Entities. BANK: Financial Entity with a license to operate issued by the SBEF, to operate as a Bank.
NET EQUITY: Is the Net Equity defined by SBEF Resolution No. 127/96 of December 20, 1996 and/or subsequent modifications.
CPCR-ALADI: ALADI Reciprocal Payments and Credits Agreement. System for compensating debtor and creditor balances of banking operations carried out between the member countries of said Organization.”
SAYS: Article 3 (Requirements). 3. That the Bank's indebtedness with the BCB, through the instruments of the CPCR-ALADI, does not exceed its Net Equity once. 5. That the Bank's delinquent portfolio does not exceed 12% of its gross portfolio, nor that the net delinquent portfolio net of provisions for uncollectible portfolio exceeds 8% of its gross portfolio.
SHOULD SAY: “Article 3 (Requirements). 3. That the Bank is not in breach of the Internal Regulation for Channeling Operations through the ALADI Reciprocal Payments and Credits Agreement, approved by Board Resolution No. 165/97. 5. That the Bank's delinquent portfolio does not exceed 12% of its gross portfolio, nor that the net delinquent portfolio net of provisions for uncollectible portfolio exceeds 8% of its gross portfolio. If the Bank's delinquent portfolio exceeds 12% of its gross portfolio, it may compensate the excess by maintaining a net delinquency with provisions that is below the required level of 8% by the same magnitude, according to the following table:
COMPENSATION TABLE (In Percentages) DELINQUENT PORTFOLIO / GROSS PORTFOLIO | EXCESS TO COMPENSATE | NET DELINQUENT PORTFOLIO / PROVISIONS | COMPENSATORY EXCESS 12 | 0 | 8 | 0 13 | 1 | 7 | 1 14 | 2 | 6 | 2 15 | 3 | 5 | 3 16 | 4 | 4 | 4 17 | 5 | 3 | 5 18 | 6 | 2 | 6 19 | 7 | 1 | 7 20 | 8 | 0 | 8
Excess to Compensate = (Delinquent Portfolio / Gross Portfolio – 12%) Compensatory Excess = [8% - (Delinquent Portfolio - Portfolio Provisions) / Gross Portfolio] Compensatory Excess > Excess to Compensate.”
SAYS: Article 9 (Temporary Suspension) The GSF will notify the EFA that is in breach of the Regulation and will give it an irrevocable period of fifteen (15) calendar days to correct the breach. Upon expiration of that period, it will bring the fact to the attention of the General Management of the BCB, which will temporarily suspend the EFA and inform in writing the suspended entity, the SBEF, and the BCB's International Affairs and Currency and Credit Management regarding this decision.
SHOULD SAY: “Article 9 (Temporary Suspension) The GSF will notify the EFA that is in breach of the Regulation and will give it an irrevocable period of fifteen (15) calendar days to correct the breach. Upon expiration of that period, it will bring the fact to the attention of the General Management of the BCB, which will temporarily suspend the EFA and inform in writing the suspended entity, the SBEF, and the BCB's International Affairs Management regarding this decision.”
Article 2.- Eliminate Articles 13 and 14 of the Regulation for the Authorization of Banks as Accredited Financial Entities (EFA), approved by Board Resolution No. 117/99.
Article 3.- The approved modifications will enter into force on August 1, 1999.
Article 4.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.
La Paz, July 6, 1999
Juan Antonio Morales A.
Armando Pinell S. Jaime Ponce G. Juan Medinaceli
Fernando Campero P. Armando Méndez M.
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