Resolution 122/97 on Financial Deposits for Financial Entities with Deficient Equity

RESOLUTION OF THE BOARD OF DIRECTORS NO. 122/97

SUBJECT: FINANCIAL SYSTEM - REGULARIZATION DEPOSITS OF FINANCIAL ENTITIES WITH DEFICIENT EQUITY.

VIEWING:

The Law of the Central Bank of Bolivia No. 1670 of October 31, 1995.

The Law of Banks and Financial Entities No. 1488 of April 14, 1993.

The Technical Report of the Financial System Management GSF No. 125/97 of June 12, 1997.

The Report of the Chief Legal Advisor A.L. No. 014/97 of June 13, 1997.

CONSIDERING:

That according to what is established in Articles 112 and 47 of Law No. 1488, when a banking financial entity does not maintain a net equity equivalent to at least eight percent (8%) of the total of its assets and contingencies, weighted according to their risks, it must deposit with the Central Bank of Bolivia any increase in its liabilities and decrease in assets.

That Report No. 125/97 from the Financial System Management recommends that the deposits to be made with the Issuing Entity in application of the equity regularization provision established in Law 1488, be effected through the purchase of securities issued by the BCB.

That Title II, Chapter VI of Law No. 1670, empowers the Central Bank of Bolivia to issue general application norms for the entities of the financial intermediation system and financial services, whose operation is authorized by the Superintendence of Banks and Financial Entities.

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That in the opinion of the Chief Legal Advisor, there is no legal impediment for the Board of Directors of the BCB to issue norms in this matter.

Therefore,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Authorize those financial entities subject to the application of Article 112 of Law No. 1488 and that are in compliance with their Legal Reserve requirements provided for in Article 7 of Law 1670, to constitute deposits in the Central Bank of Bolivia of any increase in their liabilities and decrease in assets, in cash, TAA's, CD's or LT's; in Bolivianos or United States Dollars of North America.

Article 2.- The accounting of the operations carried out with the titles indicated in Article 1, will be at market value at the moment the deposit is constituted, in accordance with the Chart of Accounts of the Superintendence of Banks and Financial Entities.

Article 3.- The Titles referred to in Article 1 must be endorsed as collateral, to the order of the BCB and remain in custody of the issuing entity.

Article 4.- For cash deposits and titles deposited as collateral, the Central Bank of Bolivia will open special accounts.

Article 5.- The Open Market Operations Committee will define any operational mechanism not contemplated in this Resolution.

Article 6.- This Resolution will enter into force on August 1, 1997.

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The financial entities currently [apply] until July 31, 1997.

Article 7.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

26.VI.97
______________________ Juan Antonio Morales A.

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Armando Pinell S. Jaime Ponce G.

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Juan Medinacelli V. Fernando Campero P.