Resolution Reforming Article 1 and Annex 1 of the Standard on Determining the Risk Level of Institutions in the Deposit Guarantee System

Page 1 of 3 Resolution No. CD-SIBOIF-1053-2-ABRI24-2018 Dated April 24, 2018

STANDARD REFORMING ARTICLE 1 AND ANNEX 1 OF THE STANDARD ON THE DETERMINATION OF THE RISK LEVEL OF INSTITUTIONS IN THE DEPOSIT GUARANTEE SYSTEM

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

CONSIDERING

I

That on September 3, 2008, the Board of Directors of the Superintendence of Banks and Other Financial Institutions approved the Standard on the Determination of the Risk Level of Institutions in the Deposit Guarantee System, contained in Resolution No. CD-SIBOIF-550-3-SEP3-2008, published in La Gaceta, Official Gazette No. 186, of September 29, 2008; which aims to establish the criteria for determining the risk level of supervised financial institutions that are part of the Deposit Guarantee System, in accordance with the authority established in Article 18 of Law No. 551, Law of the Deposit Guarantee System and its reforms (Law 551).

II

That based on the aforementioned authority, it is necessary to reform Article 1 and Annex 1 of the aforementioned Standard, in order to update the list of internationally recognized rating agencies and the equivalence table by risk category.

In exercise of its powers,

HAS ISSUED

The following,

Resolution No. CD-SIBOIF-1053-2-ABRI24-2018

STANDARD REFORMING ARTICLE 1 AND ANNEX 1 OF THE STANDARD ON THE DETERMINATION OF THE RISK LEVEL OF INSTITUTIONS IN THE DEPOSIT GUARANTEE SYSTEM

FIRST: Article 1 of the Standard on the Determination of the Risk Level of Institutions in the Deposit Guarantee System, contained in Resolution No. CD-SIBOIF-550-3-SEP3-2008, of September 3, 2008, published in La Gaceta, Official Gazette No. 186 of September 29, 2008, and its reforms, is hereby amended, which shall read as follows:

"Art. 1 Concepts.- For the purposes of applying the provisions contained in this standard, the terms indicated in this article, both in uppercase and lowercase, singular or plural, shall have the following meanings:

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a) Rating Agency: Internationally recognized risk rating agencies, as well as other foreign risk rating agencies registered in the Registry of the Superintendence. b) Registry: The Registry of Risk Rating Companies of the Superintendence. c) Superintendence: Superintendence of Banks and Other Financial Institutions."

SECOND: Annex I of the Standard on the Determination of the Risk Level of Institutions in the Deposit Guarantee System referred to in the first section of this resolution is hereby amended, which shall read as follows:

"Annex 1.

EQUIVALENCE TABLE

The risk rating of the financial institution must be made without consideration of country risk or the sovereign risk of the Central Government of the country, that is, a local rating. To determine the risk category, the long-term issuer rating must be used according to the following equivalence table:

Risk Rating Agencies Risk Category Equivalence Category 1 Low Risk Category 2 Normal Risk Category 3 Medium Risk Category 4 High Risk Fitch IBCA Between AAA and AA- Between A+ and BBB+ Between BBB and BBB- Between BB+ or lower Moody's Investor Services Aaa and Aa3 A1 and Baa1 Baa2 and Baa3 Ba1 or lower Standard & Poor's AAA and AA- A+ and BBB+ BBB and BBB- BB+ or lower Dominion Bond Rating AAA and AA- A+ and BBB+ BBB and BBB- BB+ or lower Centromericana Risk Rating Company, S.A. AAA and AA- A+ and BBB+ BBB and BBB- BB+ or lower Pacific Credit Rating, S.A. de C.V. AAA and AA- A+ and BBB+ BBB and BBB- BB+ or lower Kroll Bond Rating Agency, Inc. AAA and AA- A+ and BBB+ BBB and BBB- BB+ or lower

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The Superintendent may update the above table in case of new authorized risk rating companies registered in the registry kept by the Superintendence for these purposes, establishing the link between the rating company's scale and the corresponding risk category. Likewise, it may be updated when new internationally recognized risk rating agencies are determined, or in case these entities modify their risk rating nomenclatures; which shall be reported to the Board of Directors of the Superintendence prior to the notification made to financial institutions via circular."

THIRD: This standard shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Gazette. (f) S. Rosales C. (f) M. Díaz O. (f) Gabriel Pasos Lacayo (f) Fausto Reyes B. (f) illegible (Silvio Moises Casco Marenco) (f) U. Cerna B. Secretary.

URIEL CERNA BARQUERO Secretary of the Board of Directors SIBOIF