Resolution Reforming Articles 4, 7, 8, and 9 and the Annex of the Standard on Evaluation of Accounts Receivable Balances and Assets Acquired in Recovery by General Warehouses

Resolution No. CD-SIBOIF-830-1-ABR11-2014 Date: April 11, 2014

STANDARD REFORMING ARTICLES 4, 7, 8, AND 9, AND THE ANNEX OF THE STANDARD ON EVALUATION OF BALANCES IN ACCOUNTS RECEIVABLE AND ASSETS ACQUIRED IN RECOVERY BY GENERAL WAREHOUSES

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

CONSIDERING

I

That on May 6, 2011, the Standard on Evaluation of Balances in Accounts Receivable and Assets Acquired in Recovery by General Warehouses was approved, contained in Resolution No. CD-SIBOIF-675-2-MAY6-2011, published in La Gaceta, Official Journal No. 130, of July 13, 2011.

II

That it is necessary to reform Articles 4, 7, 8, and 9 of the aforementioned standard, for the following purposes: i) increase the provisioning percentages for accounts receivable of General Warehouses in order to improve the quality of the balances of these accounts; ii) specify the cases in which the General Warehouse must provision before maturity the balances of its accounts receivable; and iii) adapt the scope and valuation criteria of real estate assets assigned to General Warehouses for the recovery of balances from their accounts receivable, to what is established in International Accounting Standard (IAS) 16, and to the operational reality of the warehousing industry.

III

That it is also necessary to modify the current format contained in the Annex of the aforementioned standard, in order to simplify the information required from General Warehouses regarding the balances of accounts receivable from their clients.

IV

That based on the authority conferred by Articles 2, 55, and 139 of Law No. 734, General Warehouse Law, published in La Gaceta, Official Journal No. 201, of October 21, 2010; and Article 2, fourth paragraph, Article 3, numeral 13), and Article 10, numeral 1) of Law 316, Law of the Superintendence of Banks and Other Financial Institutions, published in La Gaceta, Official Journal No. 196 of October 14, 1999, and its reforms.

In exercise of its powers,

HAS ISSUED

The following:

CD-SIBOIF-830-1-ABR11-2014

STANDARD REFORMING ARTICLES 4, 7, 8, AND 9, AND THE ANNEX OF THE STANDARD ON EVALUATION OF BALANCES IN ACCOUNTS RECEIVABLE AND ASSETS ACQUIRED IN RECOVERY BY GENERAL WAREHOUSES

FIRST: Articles 4, 7, 8, and 9, and the Annex of the Standard on Evaluation of Balances in Accounts Receivable and Assets Acquired in Recovery by General Warehouses, contained in Resolution No. CD-SIBOIF-675-2-MAY6-2011, published in La Gaceta, Official Journal No. 130, of July 13, 2011, are hereby reformed, which shall read as follows:

"Art. 4. Provisions for accounts receivable.- The balances described in Article 3 shall be provisioned by age according to the strata described in the "Annex", which forms an integral part of this standard. The following provisions are established: a) 50% of the balance found in the stratum of more than 90 to 120 days; b) 70% of the balance found in the stratum of more than 120 to 150 days; c) 100% of the total accumulated balance when there are balances in the stratum of more than 150 days.

Art. 7. Exceptions.- Only those client balances that have been judicially declared insolvent, in bankruptcy, or with an unknown domicile in the country may be provisioned at 100% earlier than provided for in Article 4 of this standard; in the latter case, supported by the corresponding legal opinion. Their regularization may be immediate or may not exceed 181 days after having been provisioned.

Art. 8. Scope of evaluation.- The assigned assets shall be evaluated in their entirety at least once every three years for real estate assets, and for movable assets with a semi-annual periodicity. For the purposes of this standard, assigned assets shall be understood as those acquired via judicial or extrajudicial means for the recovery of the balances of the corresponding accounts receivable.

Art. 9. Criteria for evaluation.- Assigned merchandise shall be valued in accordance with the analysis and documentation criteria referred to in the regulations governing the operational and financial matters of general warehouses. In the case of assigned real estate assets, the evaluation of said assets must be performed based on the estimation of the realization value in accordance with the regulations governing the matter of appraisers who provide services to institutions of the Financial System. All real estate assets whose book value in national currency or foreign currency is greater than the equivalent in cordobas of twenty-five thousand United States dollars (US$25,000.00), at the official exchange rate, must have valuations performed by independent appraisers of the warehouse, duly registered in the Register of Appraisers of the Superintendence of Banks. The evaluation of shares and rights in companies and, in general, of financial instruments that have been received in payment in kind or assigned, shall be carried out in accordance with the criteria defined in the regulations governing the matter of appraisers who provide services to institutions of the Financial System.

ANNEX NAME OF THE WAREHOUSE COMPANY Age of Accounts Receivable Balances 1501.00.00 Month of:

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Client Name From 0 to 30 days More than 30 and up to 60 days More than 60 and up to 90 days More than 90 and up to 120 days 70% stratum More than 120 and up to 150 days 100% stratum More than 150 days 100% total accumulated balance Total accumulated balance Provision Amount Net Balance

Totals C$

SECOND: This standard shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Journal.

(f) Gabriel Pasos Lacayo (f) V. Urcuyo V. (f) F. Reyes B. (f) illegible (Silvio Moisés Casco Marenco) (f) illegible (Freddy Blandón Argeñal) (f) U. Cerna B. Secretary.

URIEL CERNA BARQUERO Secretary of the Board of Directors SIBOIF