Resolution 111/98 Authorizing the Acceptance of a Dation in Payment Agreement with the Liquidating Intendancy of Banco Potosi S.A.

RESOLUTION OF THE BOARD OF DIRECTORS NO. 111/98

SUBJECT: AUTHORIZES THE SIGNING OF A DATION IN PAYMENT AGREEMENT WITH THE LIQUIDATING INTENDANCY OF BANCO POTOSI S.A. IN LIQUIDATION.

HAVING SEEN:

The General Banking Law of July 11, 1928.

Law 1670 of October 31, 1995, and the Statute of the BCB of February 20, 1997.

Resolution of Degrees and Preferences No. 142/89 of June 8, 1989, issued by the Tenth Court of Civil Matters.

The Note from the Liquidating Intendancy of Banco Potosi S.A. INT. 727/12/98 of December 3, 1998.

The reports from the Financial System Management SEL-DEL 259/98 and SEL-DEL 285/98.

The Note from the Legal Advisory Office ALEG. No. 417/98 of December 15, 1998.

The Report from the Internal Audit Unit No. 033/98 of December 17, 1998.

CONSIDERING:

That the General Banking Law of 1928 confers attributes to the Liquidating Intendants, legally designated by the Superintendent of Banks, to sell or dispose of the assets of entities in liquidation, with prior judicial authorization. Likewise, it empowers the Liquidating Intendants to pay the claims approved in the order of precedence of the Sentence of Degrees and Preferences issued by the Judge of the Liquidation.

That Law 1670 in its Article 54, paragraph p), and the Statute of the BCB in its Article 14, paragraph p), confer attributes on the Board of Directors to approve the acquisition of movable and immovable goods, as well as to authorize the signing of inter-institutional agreements.

That it is necessary to expedite the closure process of Banco Potosi S.A. in Liquidation, as otherwise, the administrative costs of the liquidation will continue to erode the recoverable assets of this entity to the detriment of the BCB.

That since the Sentence of Degrees and Preferences was issued in 1989, the BCB no longer has expedited legal avenues for the full recognition of its claims.

That more than 11 years have passed since the beginning of the liquidation procedure, and Banco Potosi S.A. does not have sufficient assets to cancel even the claims recognized in the Sentence of Degrees and Preferences.

That according to Internal Audit recommendations, it is necessary to regularize the amounts of the claims claimed by the BCB based on the amounts stated in the Sentence of Degrees and Preferences, and likewise, to elevate to the consideration of the Board of Directors the corresponding payment offers.

That through note INT. 727/12/98 of December 3, 1998, the Liquidating Intendancy of Banco de Potosi S.A. formalized its payment offer, accepting the result of the negotiation held with the Financial System Management of the BCB.

That in its report SEL-DEL No. 259/98, the Financial System Management informed the Board of Directors of the current financial situation of Banco Potosi S.A., as well as the status of the claims that this entity has with the BCB, suggesting negotiation policies that allow for the expediting of its closure.

Likewise, through Report SEL-DEL 285/98, said Management, in addition to requesting the write-off of unrecognized items, states that the negotiation with the Liquidating Intendancy has concluded, recommending to the Board of Directors to accept the negotiated dation in payment offer, as it represents the best alternative for the BCB to at least recover part of its claims.

That in the opinion of the Legal Advisory (Note ALEG. No. 417/98), agreements are legal means of recovering credits granted to Banks in Liquidation, pronouncing favorably on the results of the negotiations carried out with the Liquidating Intendancy.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Accept the negotiated dation in payment offer between the Financial System Management and the Liquidating Intendancy of Banco Potosi S.A., according to which the entity in liquidation will transfer all its remaining assets to the BCB, according to the following table:

OFFER OF ASSETS FOR DATION IN PAYMENT
(Expressed in Dollars)

Entity in Liquidation | Dation in Payment Offer --- | --- Banco Potosi S.A. | Offered Asset: Negotiated Offer Cash | 2,047,425.98 Portfolio | 1.00 Real Estate | 761,006.25 Other Goods for Use | 4,423.42 Total | 2,812,856.65

Article 2.- Authorize, charged against provisions made, the write-off of the items not recognized in the Sentence of Degrees and Preferences issued by the Judge of the Liquidation, according to the following detail:

Article 3.- Authorize the write-off of unpaid balances of accounts receivable charged against the provisions made, as well as the reversal of remaining provisions, once the price of the dation in payment is registered.

Article 4.- Authorize the corresponding accounting withdrawal of unrecognized claims, unpaid balances, and Accounts of Accrued Interest to be Received from the Group of Registration Accounts.

Article 5.- Authorize the President of the BCB to sign the Dation in Payment Agreement with the Liquidating Intendancy of Banco Potosi S.A., with powers to adjust the amounts and the composition of the assets based on the date of signing the Agreement, being required to inform the Board of Directors on the matter.

Article 6.- The Unit of Legal Affairs must present the Agreement before the Judge of the Liquidation. Likewise, it will manage before the Superintendence of Banks and Financial Entities the application of Article 131 of the General Banking Law of July 11, 1928 against the presumed responsible for the administration of Banco Potosi S.A., in order for the BCB to be able to recover the unpaid balance to date.

Article 7.- The Presidency and the General Management are charged with executing this Resolution.

La Paz, December 17, 1998

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Juan Antonio Morales A.

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Armando Pinell S. Jaime Ponce G. Fernando Campero