Resolution 176/97 - Liquidity Loan to Banco de La Paz S.A. up to USD 5,000,000

BOARD RESOLUTION NO. 176/97
SUBJECT: FINANCIAL SYSTEM - LIQUIDITY LOAN TO BANCO DE LA PAZ S.A. UP TO USD 5,000,000.

SEEING:
The Law No. 1670 of the Central Bank of Bolivia (BCB) of October 31, 1995.
The Board Resolution No. 148/95 of November 23, 1995.
The Regulations to Address Transitory Liquidity Needs of the Financial System, approved by Board Resolution No. 025/94 of February 17, 1994.
Resolution No. 09/97 of the Financial System Development and Productive Sector Support Fund (FONDESIF) of March 31, 1997.
The Note from the Superintendence of Banks and Financial Entities SB/ISB/DOCUMENT 57361 of December 23, 1997.
The Note from Banco de La Paz S.A. GIT 989/97 of December 23, 1997.
The Report from the Financial System Management GSF 199/97 of December 23, 1997.
The Report from the Legal Advisory ALEG No. 368/97 of December 23, 1997.
Act No. 40/97 of the Financial System Analysis Committee (COASIF) dated December 23, 1997.

CONSIDERING:
That Banco de La Paz S.A. has requested a credit from the BCB to address transitory liquidity needs, due to the decline in its deposits and having exhausted other financing sources for the stated purpose.

//2. B.D. No. 176/97
That according to the Strengthening Plan of Banco de La Paz S.A., approved by FONDESIF via Resolution No. 09/97 of March 31, 1997, the shareholders of said financial entity must effectively contribute the sum of USD 3,700,000 by December 31 of this year as a capital contribution. That in Act No. 40/97 of December 23, 1997, the favorable opinion of the Financial System Analysis Committee (COASIF) appears for granting the aforementioned liquidity credit up to the amount of USD 5,000,000. That the liquidity credit requested by Banco de La Paz S.A. is backed primarily by a portfolio with rating 1 (normal), in a 2 to 1 proportion, thus guaranteeing the recovery of State funds. That according to the Report from the Financial System Management, the requesting entity has no pending liquidity credits to pay. That in the opinion of the Legal Advisory, there is no legal impediment to processing the request of Banco de La Paz S.A. That Article 36 of Law 1670 of October 31, 1995, authorizes the BCB to grant liquidity credits to banks and financial intermediation entities, in duly justified cases and qualified by its Board by an absolute majority of votes.

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

Article 1.- Exceptionally grant a liquidity credit to Banco de La Paz S.A., in accordance with the requirements established in the Regulations to Address Transitory Liquidity Needs of the Financial System and Law 1670 of October 31, 1995, under the following conditions:

//3. B.D. No. 176/97
Amount: Up to the sum of USD 5,000,000.
Currency: United States Dollars.
Interest Rate: 16.24% annual, the average active rate of the system for 30 days, in foreign currency (United States Dollars), prevailing in the market during the week of December 8 to 12, 1997. Term: 30 days from the signing of the contract. Amortization: A single payment at maturity. Guarantees: Credit portfolio with own resources of Banco de La Paz S.A., primarily with rating 1 (normal) following the criteria of the Superintendence of Banks and Financial Entities. Said portfolio should, as much as possible, have real guarantees, whose loans have maturities greater than 30 days and less than 360, computable from the date of disbursement of the credit, and must be fully satisfactory to the BCB. The temporary assignment of credit will be documented through a contract. The sum of the guarantees must be equivalent to twice the amount of the credit. //4. B.D. No. 176/97 Banco de La Paz S.A. will have seven business days to constitute the portfolio. Automatic debit in its current accounts and legal reserve held at the BCB.

Article 2.- The resources will be disbursed prior to the signing of the temporary portfolio assignment contract and will be used solely to cover exchange deficiencies of Banco de La Paz S.A. in the Clearing House.

Article 3.- During the validity of the credit, Banco de La Paz S.A. may not increase its loan or investment portfolio in accordance with Article 15 of the aforementioned Regulations.
The BCB will request the Superintendence of Banks and Financial Entities to strictly monitor all provisions of this Resolution.

Article 4.- In attention to what is provided by Article 8 of the Regulations to Address Transitory Liquidity Needs of the Financial System, Banco de La Paz S.A. must send daily to the Central Bank of Bolivia, through the Financial System Management, the following information:
a) Current and overdue portfolio (consolidated). b) Public deposits by class of deposits (consolidated). c) Passive rates by class of deposit. d) Daily projected liquidity flow for the next 7 days, comprising obligations with the public, portfolio recovery, and obligations with the exterior. //5. B.D. No. 176/97

Article 5.- Authorize the President of the BCB to sign the loan contracts and temporary portfolio assignment contracts with Banco de La Paz S.A.

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

23.XII.97

____________________ Juan Antonio Morales A.

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Armando Pinell S. Jaime Ponce G.

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Juan Pablo Zegarra A.