Resolution SBS No. 12321-2010: Establishes Liquidity and Solvency Indices and Conditions for Unauthorized Savings and Credit Cooperatives to Collect CTS Deposits

Lima, October 4, 2010

Resolution S.B.S.
No. 12321 -2010

The Superintendent of Banks, Insurance and Private Pension Fund Administrators

CONSIDERING:

That, in accordance with item 6 of the Twenty-Fourth Final and Complementary Provision of the General Law of the Financial System and of the Insurance System and the Organic Law of the Superintendent of Banks, Insurance and Private Pension Fund Administrators - Law No. 26702 and its amendments, hereinafter General Law, the Superintendent of Banks, Insurance and Private Pension Fund Administrators, hereinafter Superintendent, supervises and controls the National Federation of Savings and Credit Cooperatives of Peru – FENACREP and regulates the operations of savings and credit cooperatives not authorized to operate with public funds, hereinafter CACs;

That, in accordance with item 3 of the Twenty-Fourth Final and Complementary Provision of the General Law, the supervision of CACs is the responsibility of FENACREP;

That, Article 2 of Law No. 29463 establishes the requirements that CACs must fulfill to request a favorable opinion from their supervisory entity, in order to be able to collect compensation for time of service (CTS) deposits from their members;

That, item b) of the aforementioned Article 2 establishes as a requirement that the aforementioned cooperatives have the liquidity and solvency indices and other conditions established by the Superintendent in accordance with the Second Complementary Provision of said law;

That, in order to gather opinions from users and the general public regarding the proposed modifications to the regulations applicable to CACs, the pre-publication of this resolution was ordered on the Superintendent's electronic portal, under the provisions of Supreme Decree No. 001-2009-JUS;

Given the opinion of the Adjunct Superintendencies of Banking and Microfinance, Risks, Economic Studies and Legal Advice, and in exercise of the powers established in the Twenty-Fourth Final and Complementary Provision of the General Law, as well as in the Second Complementary Provision of Law No. 29463;

RESOLVES:

Article First.- Establish, in compliance with what is provided in Law No. 29463, the following liquidity and solvency indices, the terms of which are defined in the Annex attached to this resolution, which is published on the Institutional Portal (www.sbs.gob.pe) in accordance with the provisions of Supreme Decree No. 001-2009-JUS, as well as the conditions that Savings and Credit Cooperatives not authorized to operate with public funds must fulfill to collect CTS deposits from their members:

1. Liquidity Indices.-
   1.1. Liquid Asset / Short-term Liabilities in National Currency (%) ≥ 8%
   Liquid Asset / Short-term Liabilities in Foreign Currency (%) ≥ 20% The compliance with these indices will be verified with the information from Annex 15-B “Monthly liquidity position” of the Accounting Manual for Savings and Credit Cooperatives not authorized to operate with public funds, which must be presented by the CACs requiring authorization to collect CTS deposits, even if they have total assets that do not exceed 1,500 UIT.

1.2. Available / Deposits (%) ≥ 25%

1.3. Ten (10) Main Depositors / Deposits (%) ≤ 15%

2. Solvency Indices.-
   2.1. Total Liabilities / Net Equity (Number of times) ≤ 6 times

2.2. Reserves / Share Capital (%) ≥ 25%

2.3. (High-Risk Portfolio – Provisions) / Net Equity ≤ 0%

2.4. Risk-Weighted Assets / Effective Equity ≤ 7 times,

3. Conditions.-
   3.1. CACs wishing to collect CTS deposits from their members must maintain the average of the last twelve (12) months of the liquidity and solvency indices referred to in items 1 and 2 of this article, within the required limits.

Article Second.- FENACREP is responsible for verifying compliance with the requirements established in Law No. 29463, in accordance with the guidelines set forth in this resolution, by CACs that collect CTS deposits from their members. Likewise, it is responsible for verifying the validity and reliability of the accounting and financial information that CACs present when requesting authorization to collect CTS deposits from their members, as well as that necessary for monitoring compliance with regulatory requirements by authorized CACs, as established in Article 3 of the aforementioned law.

Article Third.- FENACREP must establish the necessary procedures for the fulfillment of the functions entrusted to it in Articles 2 and 3 of Law No. 29463. Likewise, FENACREP must publish on its website the updated list of CACs authorized to collect CTS deposits from their members, as well as those whose authorization to collect the aforementioned type of deposits has been suspended, including the information indicated in items 3.1, 3.2, and 3.3 of the following article of this resolution. Likewise, FENACREP must make the following information available to the Superintendent:

a) List of authorizations granted and denied to CACs to collect CTS deposits from their members, with the corresponding supporting reports and financial and accounting information used for the corresponding opinion, for each CAC; and,

b) List of CACs whose authorization to collect CTS deposits from their members has been suspended and/or re-authorized in accordance with Article 3 of Law No. 29463, with the corresponding supporting reports and financial and accounting information used for the corresponding suspension or new authorization, for each CAC.

Article Fourth.- CACs that are authorized to collect CTS deposits from their members in accordance with Law No. 29463 are additionally subject to the regulations applicable to them, to the following specific regulations linked to such collection:

1. In the advertising they carry out regarding the authorization to collect CTS deposits from their members, they must clearly indicate what is stated in Article 8 of the Regulations for Savings and Credit Cooperatives not authorized to operate with public funds, approved by Resolution SBS No. 540-99.

2. Prior to receiving the CTS deposits from their members, written notice must be left that they are aware that the aforementioned deposits are not covered by the Deposit Insurance Fund established in Chapter III of Title I of Section Two of Law No. 26702, that the CAC is not directly supervised by the Superintendent of Banks, Insurance and Private Pension Fund Administrators, and that the aforementioned deposits are subject to the provisions of the current Law on Compensation for Time of Service.

3. In the event that the authorization to collect CTS deposits from their members is suspended in accordance with Article 3 of Law No. 29463, the CAC must inform, its members and their corresponding employers, within five (5) business days of the suspension being known, in compliance with current regulations on CTS that:

3.1 The CAC is prevented from collecting new CTS deposits until it has a new authorization;

3.2 The CAC cannot receive new semi-annual deposits in existing CTS accounts; and,

3.3 The worker has the right to choose only one depositary, pursuant to Article 33 of the Unified Text of the Law on Compensation for Time of Service, so that when the CAC is suspended from collecting this type of deposits, as stated in Article 26 of the aforementioned unified text, the worker will freely dispose of the transfer of their CTS deposit to another authorized company.

4. Reductions in the share capital of the CAC must be communicated and explained to FENACREP, within 05 business days of their occurrence. Within the same period, they must communicate to FENACREP the non-compliance with any of the requirements indicated in Article 2 of Law No. 29463.

5. Include within the supplementary reports of external auditors referred to in Article 15 of the Regulations on External Audit of Savings and Credit Cooperatives not authorized to operate with public funds approved by Resolution SBS No. 741-2001, the review of compliance with this resolution.

6. Include within the programmed activities referred to in Article 15 of the Regulations on Internal Audit of Savings and Credit Cooperatives not authorized to operate with public funds approved by Resolution SBS No. 742-2001, the carrying out of examinations at the close of each monthly period on the compliance with this resolution, reports that must be sent to FENACREP within twenty (20) calendar days following the close of the monthly period subject to the report.

7. CACs whose collection of CTS deposits has been suspended in accordance with Article 3 of Law No. 29463 may request authorization again to collect such deposits, only three months after the date of the respective suspension.

Article Fifth.- CACs that currently have CTS deposits among their liabilities have a maximum adaptation period of one hundred eighty (180) calendar days to comply with the indices and conditions established in this resolution, having to present to FENACREP a report supporting their situation, so that the aforementioned supervisory entity carries out the corresponding evaluation in accordance with the provisions of this regulation and Law No. 29463.

Article Sixth.- This resolution enters into force from the day following its publication in the Official Newspaper El Peruano.

Register, communicate and publish.

FELIPE TAM FOX
Superintendent of Banks, Insurance and
Private Pension Fund Administrators

ANNEX

1. Liquid Asset
   a) Cash and Fixed Funds b) Banks and Other Financial Institutions of the Country 1 c) Net Interbank Funds Debtors d) Debt securities representing the Central Government and Securities issued by the Central Reserve Bank e) Negotiable Deposit Certificates and Bank Certificates

2. Short-term Liabilities
   a) Immediate Demand Obligations b) Net Interbank Funds Creditors c) Savings Deposits d) Time Deposits maturing within 360 days 2 e) Debts and Obligations maturing within 360 days f) Securities, Titles and Obligations in Circulation g) 10% of members' contributions 3

Source: Annex 15B - Monthly Liquidity Position of the Accounting Manual for savings and credit cooperatives not authorized to operate with public funds.

3. Available
   Comprises the cash held by the CAC in cash and deposits in banks, correspondents and other financial institutions of the country and abroad, other than interbank funds ceded. It also includes checks and effects of immediate collection, as well as restricted available funds. Account: 1100

4. Total Deposits
   Comprises Demand Obligations, Savings Account Obligations and Time Account Obligations Accounts: 2101 + 2102 + 2103

5. Total Liabilities
   Comprises items of obligations with members, interbank funds, debts, long-term financial obligations, provisions, values, securities and obligations in circulation and other liabilities.
   Accounts: They are defined in the Accounting Manual for Savings and Credit Cooperatives not authorized to Operate with Public Funds, within the Grouping Standards Form “A” – Balance Sheet.

Except for deposits in banks and other financial institutions in intervention and liquidation.
In case of having authorization to collect CTS deposits, these will not be considered.
Article 38 of the Cooperatives Law

6. Net Equity
   Represents the participation of members in the net asset of the CAC. It comprises contributions paid by members, including capitalizations of retained earnings, as well as additional capital from donations, reserves, accumulated results and results of the exercise. Accounts: 3100 + 3200 + 3300 + 3600 + 3800 + 3900

7. Reserves
   Comprises Cooperative Reserves and Discretionary Reserves Accounts: 3301 + 3303

8. Share Capital
   Comprises Share Capital, Additional Capital and (Subscriptions of Capital Pending Payment) Accounts: 3100 + 3200 + (3103)

9. High-Risk Portfolio
   Comprises Restructured Credits, Refinanced Credits, Overdue Credits and Credits in Judicial Collection Accounts: 1403 + 1404 + 1405 +1406

For the definitions of the accounting accounts of this Annex, the Accounting Manual for Savings and Credit Cooperatives not authorized to operate with public funds applies.