Banking Board of Ecuador

RESOLUTION No. JB-2015-3356

THE BANKING BOARD

CONSIDERING:

THAT on October 13, 1997, Mrs. Dora Inés Vinueza Samaniego and her spouse Pedro Carreño Salazar Baque entered into a contract of sale, delivery of the material work, and commercial lease with the Consortium for the Promotion of Social Interest Housing (VIS) and Banco Unión, whereby the aforementioned spouses acquired and received from Banco Unión, under commercial lease, Villa Number 11, Sector D, of the "Bosques de la Alborada" Residential Complex, built on block 11-38, Tarqui parish, Guayaquil canton, whose value was partially financed by the bank (3,685.35 UVCs); that the mandatory term for the lessees to exercise the purchase option was set at 7 years counted from the registration of the contract in the Mercantile Registry, that is, from April 9, 1998, obligating them to pay 84 monthly rents of 73.159 UVCs each according to the corresponding table;

THAT by Resolution No. JB-99-170, of October 1, 1999, the Banking Board initiated the cleanup procedure of Banco Unión, BANUNION S.A. by the Deposit Guarantee Agency; and, through Resolution No. JB-2008-1145, of June 6, 2008, the Banking Board ordered the forced liquidation of that financial institution;

THAT in application of what is provided in Resolution No. JB-2009-1427, of September 21, 2009, through a public deed celebrated on December 29, 2009, before the Twenty-Fourth Interim Notary of the canton of Guayaquil, the liquidator of Banco Unión BANUNION S.A. transferred in bulk to the Central Bank of Ecuador the entirety of the assets, other accounts, and all the bank's own property;

THAT on April 16, 2013, Mrs. Dora Inés Vinueza Samaniego filed a complaint before the Regional Intendancy of Guayaquil against the Central Bank of Ecuador on the grounds that such entity had denied her request to transfer the property to her name and release the guarantee constituted on the real estate she had acquired in 1997 from the Social Housing Consortium (VIS) through the commercial lease contract celebrated with Banco Unión, a contract that, according to the interested party, had been paid in full, but which she had not legalized in her name due to oversight; that despite the Central Bank of Ecuador, as assignee of the assets of the already liquidated Banco Unión, requiring her several certificates of no debt to Banco Unión or the Central Bank, she refused to attend her request alleging that since there was no debt with the extinct BANUNION, the property is not registered in the Central Bank of Ecuador, as it is not included in the asset transfer received from Banco Unión; and that the case must be taken to a judge;

THAT the Regional Intendant of Guayaquil through Office No. SBS-IRG-DAYEU-V-R-2013-533, of November 6, 2013, after the pertinent analysis, accepted the complaint filed by Mrs. Dora Inés Vinueza and based on the information gathered from the special inspection ordered on this case, established that Banco Unión did not transfer the referred real estate leasing as an asset to the Central Bank, but as a property that is accounted

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in an off-balance sheet account; that according to the referred office, commercial lease contracts must be accounted for in group 17, account 1705; that article 155 of the General Law of Institutions of the Financial System provides regarding goods given in commercial lease, that the lessee has the right to have the conditions of the contract respected; and, with this background, accepted the claim filed while ordering the Central Bank of Ecuador to proceed with the reclassification of the accounting account (off-balance sheet accounts) of the referred commercial lease contract and the immediate transfer of the ownership right to the indicated lessees;

THAT on November 22, 2013, the Judicial Attorney of the Central Bank of Ecuador filed a request for reconsideration before the Regional Intendant of Guayaquil, regarding the administrative act contained in Office No. SBS-IRG-DAYEU-V-R-2013-533, of November 6, 2013, which was accepted with Office No. IRG-DAYEU-V-R-2014-469, of May 19, 2014; based on the following arguments: that the property was not transferred to the Central Bank; the bank's competence is limited to the administration and realization of the transferred assets, whether individually or through the global deed of asset transfer; that reviewing the database of the migrated systems of the extinguished financial institutions, it is determined that the property identified as villa 11, model K, sector D, of the "Bosque de la Alborada" Residential Complex is not found in the records of the real estate transferred by BANUNION; that the bank does not have attributions and faculties according to Resolution No. JB-2009-1427, so it only responds for the real estate listed in the public deed of transfer of December 29, 2009; that the faculty to make transfers according to Resolution No. SBS-2011-353, of April 27, 2011, only applies to the real estate listed in the records of goods transferred by Banco Unión; that since the property is not listed in said records, the Central Bank is unable to effect the requested transfer; that there is an impossibility to reclassify the accounting account (off-balance sheet account) of the commercial lease contract signed by the claimant, Mrs. Dora Vinueza, since the accounting records transferred by Banco Unión S.A. do not list said property as an asset, nor does accounting information exist detailing the real estate in question within the custody and accounting area of the Recovery and Liquidation Department of the Bank; that regarding the disposition for immediate transfer in the name of the claimant, the Central Bank also could not effect it since it is not the owner of the property; that real estate commercial lease contracts were not contemplated at the time of making the transfers by the liquidator of the assets that made up the bank's patrimony, whose delivery and receipt were subject to the supervision of the Superintendency of Banks according to article 15 of Resolution No. JB-2009-1427; and, that the problems with the leasing cases that exist should be the subject of a definitive solution and that the bank, in application of the constitutional principle of legality provided in article 226 of the Constitution, cannot exceed its faculties and attributions, therefore requesting that the appealed act be revoked;

THAT on June 4, 2014, Mrs. Dora Vinueza Samaniego filed a review appeal before the Banking Board against the administrative act contained in Office No. IRG-DAYEU-V-R-2014-469, of May 19, 2014, with which the

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Regional Intendancy of Guayaquil nullified Office No. IRG-DAYEU-V-R-2013-533, of November 6, 2013;

THAT Mrs. Dora Vinueza Samaniego bases her review appeal on the fact that in 1997 she bought a house from the company Consorcio Promotor de Vivienda de Interés Social (VIS) in the "Bosques de Alborada" residential complex in the eleventh stage of block 11-38, financed with leasing through Banco Unión, for a ten-year term, which she finished paying in the corresponding time of the contract; that due to oversight she never legalized the papers in her name, so the house remains in the name of Banco Unión; that in 2009 the bank entered liquidation and its assets were transferred to the Central Bank of Ecuador; that she approached said entity to request the release of the mortgage and to process the deeds in her name; that they asked her for a certificate of no debt to Banco Unión, which she requested from the then liquidator of the bank and he issued one stating that she had no obligations with that entity; that the Portfolio Recovery Department of the Central Bank in February 2010 asked her for a certificate of having no pending obligations with that entity, of which she also presented a certificate and they told her to wait until a Judicial Attorney is named; that in August 2011 they asked her again for an updated certificate of no debt to the Central Bank; that she delivered it; that she spoke with the Judicial Attorney of that entity who indicated that her case was in process; that there were cases identical to hers; that time passed and in May 2012 they told her that her case could not be resolved because they could not release the guarantee on her house, since as she had no debt with Banco Unión, the property was not registered in the Central Bank and was not included in the asset transfer made in favor of that entity; that for this reason they could not transfer the property to her name; and that the case should go to a judge, since the house had already been paid; that with Office No. SBS-IRG-DAYEU-V-R-2013-533, of November 6, 2013, the Regional Intendancy of Guayaquil accepted the complaint filed against the Central Bank of Ecuador and ordered the reclassification of the accounting account (off-balance sheet account) of the referred commercial lease contract celebrated on October 13, 1997, and registered in the Mercantile Registry on March 19, 1988, to the asset accounts, group 16, account 1705 as well as the immediate transfer of the ownership right in favor of the claimant; that the lack of the title of domain of the mentioned real estate is due to the impossibility of reclassifying the accounting account (off-balance sheet account) of the referred contract to the asset accounts, group 17, account 1705 by the Bank, in reason that said property is not listed as an asset, nor does accounting information exist certifying its existence within the custody and accounting area of the Recovery Department of the Central Bank of Ecuador; and that the Regional Intendancy of Guayaquil in the office subject of the appeal, determines that it is
necessary to conduct a trial to achieve that the property be transferred in her favor, for which reason it accepted the request for reconsideration filed by the Central Bank; and, that for the reasons stated, she requests that the administrative act contained in Office No. IRG-DAYEU-V-R-2014-469, of May 19, 2014, be revoked;

THAT by writing presented on June 27, 2014, Dr. Hugo Sánchez Gordón, Judicial Attorney of the Central Bank of Ecuador, within the review appeal, states that he ratifies and reproduces all the factual and legal grounds manifested in the request for reconsideration filed against the administrative act contained in Office No. IRG-DAYEU-V-R-2013-533, of November 6,

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2013; that there is a myriad of requests from clients of the liquidated institutions, asking the Central Bank to proceed to legalize and comply with what is stated in the real estate commercial lease contracts; that on February 20, 2014, the Organic Law for the closure of the 1999 banking crisis came into effect, which establishes some mechanisms for solving problems arisen such as the case in question; that article 6 of the law determines the guidelines for the transfer of assets to public sector entities, which constitute successors in law of the encumbrances, contracts and/or affects weighing on such assets; that in concordance, article 28 of the law determines how to proceed in the processes of alienation of movable and immovable goods in process at the Central Bank of Ecuador and that the global accounting entries that the bank holds by virtue of the asset transfer carried out in accordance with Resolution No. JB-2009-1427, constitute executive titles; that according to the law, the Central Bank of Ecuador has the guidelines to conclude the cases regarding leasing contracts, since as a public entity it is subject to article 226 of the Constitution; that the Central Bank cannot exceed the faculties and attributions granted to it by the Banking Board, as well as what is established in the aforementioned law, which provides for the transfer without exception and irrevocably of the assets of the extinguished financial institutions under its charge, to the public institutions determined by said law, in order to conclude the cases arisen by the crisis; and, that the Central Bank as assignee of the assets and responsible for the collection of the institutions of the closed banking is obliged to respect and comply with the norms imposed by the control bodies and continue with the collection of pending debts and payment to the creditors of the ceding institutions;

THAT regarding the grounds of the appeal presented by Mrs. Dora Inés Vinueza Samaniego, it must be considered that according to Resolution No. JB-2009-1427, of September 21, 2009, entities in forced liquidation that did not register liabilities for values higher than assets, and that had exhausted the management for the realization of the assets, due to difficulties in their sale or auction, or to deliver them in payment in kind to their creditors, could finalize the liquidation process, prior to compliance with the requirements indicated in that regulation; to that effect, institutions in forced liquidation had to transfer their assets through a public deed, signed by the liquidator and by the legal representative of the financial system institution assignee of the assets, in this case the Central Bank of Ecuador, in which the goods to be transferred had to be indicated globally, by their amount and item; that said resolution also required that the public deed incorporate as enabling documents, the detail of the transferred assets and the list of creditors of the ceding institution, with the corresponding values; and, that with respect to the tradition of the assets and their respective guarantees and rights, article 6 of Resolution JB-2009-1427 provided that it would operate of full right, without need for endorsements, notifications, or registrations except in the case of real estate, whose transfer had to be made through a public deed that would be instrumented for all real estate that are transferred by each financial institution in forced liquidation, which must be registered in each canton to which the respective real estate belonged;

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THAT the public deed celebrated on December 29, 2009, before the Twenty-Fourth Notary of the canton of Guayaquil, between the liquidator of Banco Unión, BANUNION S.A. and the General Manager of the Central Bank of Ecuador, refers to the transfer of the entirety of the assets, other accounts, and all the bank's own property; that numeral three point one of clause three of the deed refers to the transfer of all assets, in particular the real estate owned by the bank, whose description, history of domain, boundaries, and measurements are detailed in annex one of that deed; and, it also established the obligation of the intervening parties to register in the Property Registry where each of the real estate properties are registered;

THAT from the information provided by the Central Bank of Ecuador and that is in the file of the appeal, in the asset transfer deed mentioned above, the real estate subject of the commercial lease contract signed with Banco Unión by Mrs. Dora Vinueza and her spouse was not included as part of the assets, so said asset is not listed in the detail required in the regulation for the conclusion of liquidation processes; that the above is corroborated from the copy of internal memorandum No. BCE-CYC-GYE-2013-0075-M, of November 2, 2013, in which a response is given to the request of the Judicial Attorney of the Central Bank of Ecuador to inform if in the accounting records specifically in the off-balance sheet accounts of Banco Unión S.A., the real estate subject of Mrs. Vinueza's complaint is registered, indicating that reviewing the documentation in custody of the Recovery and Liquidation Directorate of that entity, there is no accounting information detailing the real estate in question; that additionally, from the reading of the office of the Central Bank of Ecuador No. BCE-DRLG-965-2013, of June 14, 2013, which in turn is based on Office No. BCE-SACYS C-449-2013, of June 7, 2013, it is indicated that there is no information demonstrating that Mrs. Dora Inés Vinueza Samaniego canceled an obligation for the concept of commercial lease; that additionally, Mrs. Vinueza does not maintain direct risk with the closed banking liquidated as of December 31, 2009 and as of March 31, 2010, nor does she maintain risk with the Central Bank; and, that from the copy of Office No. BCE-DRLG-SCyC-155-2013, of June 7, 2013, the responsible of the Subprocess Accounting and Custody informs the Director of Recovery and Liquidation of the Central Bank of Ecuador, that there is no documentation in the entity of the clients Dora Inés Vinueza Samaniego and Pedro Carreño;

THAT the appellant has presented as support for her claim the certification extended by engineer Carlos Benítez Morales, Liquidator of Banco Unión, BANUNION S.A., dated December 31, 2009, in which it indicates that once the accounting records of the credit operations were reviewed, Mrs. Vinueza does not have direct or indirect debts with that entity, while the certifications of July 1 and August 25, 2010 issued by the Central Bank of Ecuador, when referring to Mrs. Vinueza state that it does not register documents in custody for direct obligations with the Central Bank of Ecuador, or pending payment in the liquidated financial institutions as of December 31, 2009 and on that date under the Central Bank of Ecuador; that according to the copy of the Mercantile Registry certificate as of November 15, 2012, which is in the file, the commercial lease contract celebrated by Mrs. Vinueza and her spouse is in force, that is, it has not been

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canceled; that according to the copy of the real estate registration certificate number 167209, of the same date, the property acquired by Mrs. Dora Vinueza and her spouse appears registered since March 19, 1998 in the name of Banco Unión, so said property has not been transferred to the Central Bank of Ecuador, despite being listed as property of the bank in the corresponding Property Registry; and, that in the lack of certainty of the accounting situation of the property subject of Mrs. Vinueza's complaint, it does not correspond to the Superintendency of Banks to dispose of the reclassification of the accounting account of the commercial lease contract celebrated on October 13, 1997 and much less the transfer of the property to the Central Bank of Ecuador;

THAT the Sixth Transitional Provision of the Organic Law that repeals the Law of Credit Information Bureaus, with effect from December 3, 2012, establishes that the Central Bank of Ecuador in its capacity as assignee of the assets and, therefore, of the collection portfolio of the financial institutions of the so-called "closed banking" is not a successor in law of said financial institutions, for the same reason the control body could not well dispose of the bank the transfer of domain of a property that had not been transferred to it by the extinct Banco Unión, BANUNION S.A.;

THAT article 6 of the Organic Law for the Closure of the 1999 Banking Crisis is also not applicable to the property whose transfer has been requested by Mrs. Vinueza, in reason that said norm refers exclusively to the assets ceded by the extinguished financial institutions, which is not the case here, since from the information provided by the Central Bank the property subject of Mrs. Vinueza's complaint is not listed in the detail of assets corresponding to the transfer carried out by the liquidator of BANUNION to the Central Bank by virtue of Resolution No. JB-2009-1427;

THAT Mrs. Vinueza affirms having canceled the value of the commercial lease contract and the certifications both of the former liquidator of Banco Unión, BANUNION S.A. and of the Central Bank of Ecuador corroborate that there are no pending obligations with said institutions; that notwithstanding this control body lacks legal attribution to dispose that accounting records be changed or that transfer of domain of real estate that were not subject of the transfer ordered with Resolution No. JB-2009-1427 be effected; and, that in the lack of legal norm that determines the procedure to follow with those goods that even being legally registered as property of the institutions in liquidation already extinct, were not in their time included in the transfer deeds to the Central Bank of Ecuador by their liquidators, it cannot be supplemented with instructions of the control body.

THAT the case presented by Mrs. Dora Vinueza is not considered in the scenarios established in numeral 3) of the Thirty-Sixth of the Reformatory and Derogatory Provisions of the Organic Monetary and Financial Code, with which a reform was introduced to article 14 of the Organic Law for the closure of the 1999 banking crisis, in benefit of commercial lease operations celebrated with the extinguished financial institutions;

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THAT in application of the principle of legality established in article 226 of the Constitution of the Republic, the Superintendency of Banks and Insurance as the control body of the financial system exercises the attributions and faculties conferred by the Constitution and the law, among which does not include that of declaring rights. This without prejudice to the legitimate right that Mrs. Dora Vinueza has to go to other competent instances in defense of her interests;

THAT the second paragraph of the Third Transitional Provision of the Organic Monetary and Financial Code provides that the Banking Board will continue to act until resolving all complaints, appeals, and other administrative procedures that were being heard on the date of its entry into force, within the term of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2014-1043 of December 19, 2014, recommended to the Banking Board to reject the claim contained in the review appeal filed;

AND,

IN exercise of its legal attributions;

RESOLVES:

SINGLE ARTICLE.- REJECT the review appeal filed by economist Dora Inés Vinueza Samaniego; and, consequently CONFIRM the administrative act contained in Office No. IRG-DAYEU-V-R-2014-469, of May 19, 2014, with which the request for reconsideration filed by the Central Bank of Ecuador against the administrative act contained in Office No. SBS-IRG-DAYEU-V-R-2013-533, of November 6, 2013, was accepted, without prejudice to the claimant going before the ordinary justice to assert her rights.

NOTIFY.- Given at the Superintendency of Banks, in Quito, Metropolitan District, on the fifteenth of April