Resolution Derogating the Standard on Short-Term External Debt

1 Resolution No. CD-SIBOIF-897-1-JUL7-2015 Dated July 7, 2015 Derogation of the Standard on Short-Term External Debt

The Board of Directors of the Superintendence of Banks and Other Financial Institutions,

CONSIDERING

I

That on April 26, 2000, Resolution No. CD-SIB-107-4-ABR26-2000 was issued, containing the Standard on Short-Term External Debt, which aims to establish limits on external debt in foreign currency, up to one year, contracted by banks with foreign financial institutions.

II

That the purpose for which the aforementioned standard was issued was to serve as a temporary palliative measure to manage the financial risk (liquidity and market) of banks, as stated in its preamble.

III

That in addition to being a temporary measure, the prudential character of the aforementioned standard regarding financial risk management is quite limited for the following reasons: i) its limits do not apply to long-term external debt; ii) they also do not apply to short-term and long-term internal debt; and iii) it presents exceptions that, due to their breadth, allow exceeding the established limits with ease.

IV

That at present, there is a more comprehensive regulatory framework for financial risk management, contained in the following regulations: i) Standard on Interest Rate Risk Management, Resolution CD-SIBOIF-337-1-ENE26-2005; ii) Standard on Liquidity Risk Management and Maturity Matching, Resolution CD-SIBOIF-521-1-FEB6-2008; and iii) Provisions on capital charge for foreign exchange risk, contained in the Standard on Capital Adequacy, Resolution CD-SIBOIF-651-1-OCTU27-2010.

V

That specifically, the Standard on Liquidity Risk Management and Maturity Matching establishes provisions to measure and control both the liquidity position and the maturity matching between the

2

active and passive operations of banks, a key aspect for decision-making regarding short-term or long-term borrowing, within or outside the country.

THEREFORE

The Board of Directors of the Superintendence of Banks and Other Financial Institutions, in the exercise of its powers,

HAS ISSUED

The following:

Resolution No. CD-SIBOIF-897-1-JUL7-2015

First: Resolution CD-SIB-107-4-ABR26-2000, containing the Standard on Short-Term External Debt, and its reforms included in Resolution CD-SIBOIF-197-3-MAR01-2002 and Resolution CD-SIBOIF-299-1-JUN11-2004, the latter published in La Gaceta, Official Journal, Number 123 of June 24, 2004, are hereby repealed.

Second: This resolution shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Journal. (f) S. Rosales C. (f) V. Urcuyo V. (f) Gabriel Pasos Lacayo (f) illegible (Silvio Moisés Casco Marenco) (f) Fausto Reyes B. (f) illegible (Freddy José Blandón Argeñal) (f) U. Cerna B.

URIEL CERNA BARQUERO Secretary of the Board of Directors SIBOIF