Resolution 075/99: Approval of Bond Issuance to Honor Guarantee Provided to Banco de Crédito de Bolivia S.A.

RESOLUTION OF THE BOARD OF DIRECTORS NO. 075/99 SUBJECT: CURRENCY AND CREDIT – APPROVAL OF BOND ISSUANCE TO HONOR THE GUARANTEE PROVIDED TO BANCO DE CRÉDITO DE BOLIVIA S.A.

SEEING:
Law No. 1977 of May 14, 1999.
Supreme Decree No. 25382 of May 14, 1999.
Board of Directors Resolution of the Central Bank of Bolivia (BCB) No. 041/99 of May 18, 1999.
The Asset and Liability Transfer Minute signed on June 2, 1999, between Banco Boliviano Americano S.A. (BBA), Banco de Crédito de Bolivia S.A. (BCR), and the Central Bank of Bolivia.
Note GBP No. 059/99 from Banco de Crédito de Bolivia S.A. dated August 31, 1999.
Note IV-FCU-178/99 from the Selling Superintendent of Banco Boliviano Americano S.A. dated September 2, 1999.
Note IV-FCU-185/99 from the Assistant Selling Superintendent of Banco Boliviano Americano S.A. dated September 10, 1999.
Note from the Currency and Credit Management G-MyC/S-OMA-I No. 340/99 dated September 13, 1999.
Note from the Legal Affairs Unit UAJUR No. 601/99 dated September 13, 1999.

CONSIDERING:
That in application of Law 1977, which modifies legal provisions of the Financial System, the Selling Superintendent of Banco Boliviano Americano S.A. requested financial support from the BCB.

//2. R.D. No. 075/99

That Article Three of the aforementioned norm expressly states: “if the operations authorized by this Law, after all collection instances have been fulfilled and, where applicable, liquidation processes have occurred, result in patrimonial losses for the Central Bank of Bolivia, the General Treasury of the Nation may compensate these amounts with Treasury Bonds.”

That based on the provisions of Law 1977 and numeral ii, Article 11, of Supreme Decree No. 25382, by Board of Directors Resolution No. 041/99 and the asset and liability transfer minute signed on June 2, 1999, the BCB granted a guarantee for an amount equivalent to the maximum book value of all credits transferred by the BBA in favor of the BCR.

That the BCR notified the BCB, via note GBP No. 059/99 of August 31, 1999, of its determination to return a portfolio for an amount of $47,591,575.05, simultaneously requesting that the bonds to be issued in exchange for said return be dated September 1, 1999.

That the Currency and Credit Management, in its note G-MyC/S-OMA-I No. 340/99, states that, in exchange for the aforementioned return, the execution of the guarantee is required through the issuance of BCB bonds in favor of the BCR, as agreed in the asset and liability transfer minute of June 2, 1999.

That in the opinion of the Legal Advisory, the BCB Board of Directors is authorized to approve the characteristics and issuance of the aforementioned bonds.

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

Article 1.- Approve the issuance of Bonds of the Central Bank of Bolivia, intended for the payment of the guarantee committed in favor of Banco de Crédito de Bolivia S.A., in accordance with what is established by Board of Directors Resolution No. 041/99 dated May 18 of the current year and by clause eight of the asset and liability transfer minute signed on June 2, 1999, between the BBA, the BCR, and the BCB.

Article 2.- The BCB Bonds are negotiable public offering securities, of credit content, issued by the Central Bank of Bolivia to honor the guarantee committed to Banco de Crédito de Bolivia S.A. for the amount of assets returned by this entity, including principal and accrued interest up to August 30, 1999, according to the reconciliation carried out by the BBA and the BCR.

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Article 3.- The BCB Bonds will have the following characteristics:

Issuance Value: 47,591,575.05
Currency: United States Dollars.
Issuance Date: September 1, 1999.
Cut: 37 titles of $1,000,000.00 each
10 titles of $500,000.00 each
25 titles of $200,000.00 each
1 title of $591,575.05
Term: 5 years.
Variable Interest Rate: The highest between 8.72% and the average of the award in auction of the effective annual average rate of LTs for 91 days in foreign currency, valid on the date of interest payment.
Interest Payment: Annual at maturity, every September 1.
Early Redemption: From the second year after the Bond is issued, at a discount rate equal to the last interest rate effectively paid by the Bond plus 2.5%.

Article 4.- Authorize the Administration to receive the credit portfolio returned by Banco de Crédito de Bolivia S.A. and the accrued interest, as well as other accessories thereof from the date of intervention of the BBA until August 31, 1999, inclusive, in exchange for the issuance of the BCB Bonds.

Article 5.- Authorize the President of the Central Bank of Bolivia to issue a promissory note with a validity of 30 days computable from September 14, 1999, with the same issuance characteristics as the BCB Bonds, while the issuance and registration procedure for these securities is fulfilled in the Securities Market Registry.

//4. R.D. No. 075/99

Article 6.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, September 13, 1999

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Juan Antonio Morales A.

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Armando Pinell S.

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Jaime Ponce G.

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Juan Medinaceli

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Fernando Campero P.

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Armando Méndez M.