Resolution 093/2004

BOARD RESOLUTION NO. 093/2004

SUBJECT: FINANCIAL ENTITIES MANAGEMENT - APPROVES MODIFICATION TO THE PORTFOLIO ADMINISTRATION AND ASSET SALE REGULATION.

HAVING SEEN:
Law No. 1670 of October 31, 1995.
Supreme Decree No. 26688 of July 5, 2002.
Supreme Resolution No. 218899 of October 15, 1999.
Statute of the Central Bank of Bolivia of December 13, 2001.
Board Resolution No. 093/99 of October 15, 1999.
Board Resolution No. 101/99 of November 23, 1999.
Board Resolution No. 077/2002 of July 16, 2002.
Administration Mandate Contract of December 1, 1999.
Report from the Financial Entities Management GEF-SRRA No. 141/2004 of June 17, 2004.
Internal Communications from the Legal Affairs Management SAJU No. 600/2004 of June 17, 2004 and SAJU No. 651/2004 of June 28, 2004.

CONSIDERING:
That according to subsection a) of Article 54 of Law 1670, the Board has the authority to issue norms and adopt general decisions necessary for the BCB to fulfill its functions, competencies, and powers assigned by that legal provision.

That Supreme Resolution No. 218899 establishes the norms by which the Central Bank of Bolivia will be governed in the administration of assets resulting from financial support granted for the strengthening, intervention, or liquidation of financial entities.

That Supreme Decree No. 26688 maintains the spirit of Supreme Resolution No. 218899, complementing other situations for the sale of assets received by the Central Bank of Bolivia resulting from financial support granted for the strengthening, intervention, or liquidation of financial entities, by whose Article 8, the Issuing Entity is authorized to sell directly to third parties, exceptionally, assets received through judicial adjudication that are perishable or at risk of usurpation or obsolescence.

That Board Resolution No. 093/99 approved the Terms of Reference of the Direct Invitation No. 001/99 for the Administration Mandate of the assets received in dation in payment from the BBA. As a result of said process, the service was awarded to Banco Mercantil S.A. via BCB Presidency Resolution No. 09/99 of November 5, 1999.

That through the Administration Mandate Contract of 01/12/99, the Central Bank of Bolivia delivered assets in Irrevocable Administration Mandate to Banco Mercantil S.A., so that on behalf and in representation of the Central Bank of Bolivia, it would recover and sell said assets, with a contract duration of five years.

That Board Resolution No. 101/99 approved the Portfolio Administration and Asset Sale Regulation, corresponding to the Administration Mandate granted by the Central Bank of Bolivia to Banco Mercantil S.A., which was subsequently modified with Board Resolution No. 077/2002 corresponding to the sale of movable and immovable goods.

That Board Resolution No. 128/2001 approved the Statute of the Central Bank of Bolivia, in whose Article 11 subsection 37) it establishes as an attribute of the Institution's Board "To authorize the alienation and administration of portfolio and assets received in dation in payment from Banks in Liquidation."

That the Financial Entities Management, in its Report GEF-SRRA No. 141/2004, conducted an analysis on the request of the Mandatary Banco Mercantil S.A. to effect the eviction of the Rural Farm "Versalles", as well as the request to consider the costs this would entail, concluding that due to the cost-benefit ratio, it is not feasible to effect the eviction of the Rural Farm "Versalles" and recommends putting before the Board the authorization for the Mandatary BME S.A. to effect the direct sale of the referred property without taking possession, thereby avoiding the expenses of eviction and custody which, according to Mandatary BME S.A., would amount to $us131,112.- representing 52% of the offered price of $us250,552.00, as well as the low probability of selling said property to a third party, due to the settlement of several families in the cited plot, in addition to the risk of losing the offer in the event of a failure to evict the settlers.

That the Legal Affairs Management, in its note SAJU No. 651/2004, establishes that assets can be sold even while occupied as long as the buyer knows this situation and accepts it expressly, and that there is no legal impediment to carry out sale publications since a formal purchase offer does not limit the procedure provided for in the Portfolio Administration and Asset Sale Regulation, despite the existence of a formal purchase offer.

THEREFORE

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Modify Article 89 of the Portfolio Administration and Asset Sale Regulation, in the following terms:

SAYS:
Article 89.- Direct sale involves publications and promotion in the main written communication media of the country.
Purchase proposals in the direct sale modality will be presented to the Mandatary in closed envelopes. In case the offered price is lower than the book value or the last appraisal, the Mandatary will consult the Recovery and Realization Committee of the Mandator, which will pronounce itself within a period not greater than five (5) days. If it does not do so within the stated period, the proposal will be understood as approved.

SHOULD SAY:
"Article 89.- Direct sale involves publications and promotion in the main written communication media of the country.
Purchase proposals in the direct sale modality will be presented to the Mandatary in closed envelopes. In case the offered price is lower than the book value or the last appraisal, the Mandatary will consult the Recovery and Realization Committee of the Mandator, which will pronounce itself within a period not greater than five (5) days. If it does not do so within the stated period, the proposal will be understood as approved.

The procedure described in the preceding paragraphs may be modified by the Mandatary in those cases of rural assets adjudicated in the credit recovery process of the portfolio corresponding to the return of the Irregular Mercantile Deposit (BCB IV) in which there is a formal purchase offer and whose custody and eviction is difficult and onerous.

To that effect, once the formal purchase proposal is received, the Mandatary will carry out sale publications in which the existence of occupants in the property and the exclusion of seller liability regarding eviction and legal warranty of the property on this aspect will be recorded.

Fifteen (15) days after the publication, it will remit all proposals, including the formal purchase offer, to the Recovery and Realization Committee of the BCB, for its consideration and approval, accompanying legal, technical, and financial reports on the convenience of the sale, provided that the offered value is equal to or greater than the commercial value of the last updated appraisal, but not lower than the value of the quick sale."

Article 2.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

La Paz, June 29, 2004

---

Juan Antonio Morales A.

---

Juan Medinaceli V. Enrique Ackermann A.

---

José Luis Evia V. Jaime Apt B.