Resolution 074/2005

BOARD RESOLUTION NO. 074/2005
SUBJECT: FINANCIAL ENTITIES MANAGEMENT - REPEALS BOARD RESOLUTION NO. 083/2001 AND AMENDS THE PORTFOLIO ADMINISTRATION AND ASSET SALE REGULATION.

HAVING VIEWED:
Law No. 1670 of October 31, 1995.
Board Resolutions 101/99 of November 23, 1999 and 083/2001 of August 21, 2001.
Minutes No. 09/2005 of the Asset Recovery and Realization Committee of April 29, 2005.
Report from the Financial Entities Management GEF-SRRA No. 152/2005 of May 25, 2005.
Report from the Legal Affairs Management SAJU No. 090/2005, of May 30, 2005.

CONSIDERING:
That according to Article 54, subsection a) of Law No. 1670, the Board has the authority to issue norms and adopt general decisions that are necessary for the BCB to fulfill its functions, competencies, and powers assigned by that legal provision.

That through Board Resolution No. 109/99, the Board of the Central Bank of Bolivia approved the Regulation on Portfolio Administration and Asset Sale to regulate the management of assets transferred under the Administration Mandate to Banco Mercantil S.A.

That through Board Resolution No. 083/2001, the Board of the Central Bank of Bolivia authorized the restructuring of the portfolio under the Administration Mandate with Banco Mercantil S.A., with a 2-year grace period on capital for the restructuring of commercial credits and a 1-year grace period for consumer credits, at an annual interest rate of 12%, provided that the restructuring term does not exceed the average term obtained by the debtor in the restructuring of their debts with the financial system, nor be greater than 8 years, upon request by the borrowers and after they have restructured or regularized all their overdue obligations with entities authorized by the Superintendence of Banks and Financial Entities, under the terms of Law No. 2196 (FERE Law).

That the Asset Recovery and Realization Committee, considering that Board Resolution No. 083/2001 issued based on Law No. 2196 is no longer applicable regarding the interest rate under current market conditions, through Minutes No. 09/2005 recommends to the BCB Board to repeal the aforementioned Resolution, taking into account that Article 29 of the Regulation on Portfolio Administration and Asset Sale establishes that interest rates may be modified at the time of portfolio restructuring under the Administration Mandate, in accordance with market conditions, taking as a basis the active interest rates currently in force of the Mandatary.

That the Financial Entities Management in its Report GEF-SRRA No. 152/2005 indicates that Board Resolution No. 083/2001, which defines the application of the 12% interest rate for portfolio restructuring, is outdated with respect to the interest rate under current market conditions; that since its issuance to date, the Mandatary has not carried out any portfolio restructuring under the scope of this provision and that the validity of two legal provisions for the execution of a single objective causes confusion in its application by the Mandatary; consequently, it recommends to the BCB Board to repeal Board Resolution No. 083/2001, with the purpose that the Mandatary directly applies the Regulation on Portfolio Administration and Asset Sale regarding portfolio restructuring.

That the Legal Affairs Management, in Report SAJU No. 090/2005 establishes that there is no legal impediment for the Institution's Board, under article 54 subsection a) of Law No. 1670 and article 11 numeral 37 of the BCB Statute, to repeal Board Resolution No. 083/2001 and authorize the President to sign the corresponding Addendum that restores for application, the original text of subsection VI, point 4.1. of clause fourth of the Administration Mandate Contract.

THEREFORE

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

Article 1.- Repeal Board Resolution No. 083/2001 dated August 21, 2001.

Article 2.- Authorize the President of the BCB to sign an Addendum to the Administration Mandate Contract signed between the Central Bank of Bolivia and Banco Mercantil S.A., restoring subsection VI, point 4.1. of clause Fourth of the Administration Mandate Contract, suppressed by Board Resolution No. 083/2001.

Article 3.- Substitute article 27 of the Regulation on Portfolio Administration and Asset Sale, according to the following text:

SAYS:
The restructuring may not agree on a maturity date for the obligation that extends beyond the five (5) year term established for the Administration Mandate Contract.

SHOULD SAY:
"The terms may be modified for restructuring, taking as a basis the terms applied by the Mandatary in the restructuring of its portfolio."

Article 4.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, May 31, 2005

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Juan Antonio Morales A.
__________________ ___________________ _________________ Enrique Ackermann A. José Luis Evia V. Fernando Paz B.