Resolution SBS No. 1308-2013: Approves New Regulation on Transfer and Acquisition of Credit Portfolio

Lima, February 15, 2013
Resolution S.B.S.
No. 1308-2013

The Superintendent of Banking, Insurance and Private Pension Fund Administrators:

CONSIDERING:

That, the General Law of the Financial System and the Insurance System and Organic Law of the Superintendence of Banking and Insurance, Law No. 26702 and its modifying norms, hereinafter General Law, establishes in numeral 26 of article 221 that companies in the financial system may enter into contracts for the purchase or sale of portfolios;

That, through Resolution SBS No. 1114-99 and its modifying and complementary norms, the Regulation on the Transfer and Acquisition of Credit Portfolio was approved, in which the regulatory framework applicable to these operations was established;

That, it is necessary to introduce modifications to the aforementioned Regulation with the aim of simplifying the transfer and acquisition processes of portfolios, as well as prudentially adjusting some parameters that allow for greater dynamism in the financial sector;

That, through Resolution SBS No. 895-98 of September 1, 1998 and its modifying and complementary norms, the Accounting Manual for Companies in the Financial System, hereinafter Accounting Manual, was approved, which is applied for the accounting recording of operations permitted to companies in the financial system;

That, through Resolution SBS No. 11699-2008 and its modifying and complementary norms, the Internal Audit Regulation was approved, which establishes the requirements and standards of internal audit for companies in the financial system, with the aim of providing adequate protection to savers;

That, in order to collect opinions from the general public regarding the proposed modifications to the financial system regulations, the draft resolution was pre-published on the electronic portal of the Superintendence, under the provisions of Supreme Decree No. 001-2009-JUS;

Having the approval of the Adjunct Superintendencies of Banking and Microfinance, Risks, Economic Studies and Legal Advice; and,

In exercise of the powers conferred by numerals 7, 9 and 13 of article 349 of the General Law;

RESOLVES:

Article First.- Approve the new Regulation on the Transfer and Acquisition of Credit Portfolio, as follows:

“REGULATION ON THE TRANSFER AND ACQUISITION OF CREDIT PORTFOLIO

TITLE I
OF GENERAL PROVISIONS

Article 1°. - Scope
The provisions of this norm are applicable to multiple-operation companies included in letter A of article 16 of the General Law, to factoring companies, to mortgage administrator companies, to financial leasing companies and to guarantee surety companies, hereinafter companies. Likewise, this norm is applicable to the National Bank, the Agricultural Bank (AGROBANCO), the Development Financial Corporation (COFIDE) and the MIVIVIENDA Fund, insofar as they do not conflict with the specific regulations that govern their actions.

Article 2º.- Definitions
For the purposes of this norm, the following definitions shall be considered:
a. Credit portfolio: Composed of direct credits, indirect credits, written-off credits and other operations of a similar nature; or by the rights linked to them, including, but not limited to, cash flows. b. Days: Calendar days, unless it is indicated that they are business days.
c. First-category foreign financial system companies: Companies considered by the Central Reserve Bank of Peru as first-category foreign banks or as first-category foreign financial institutions in application of the provisions of article 216 of the General Law.
d. Economic group: That defined according to the criteria established by the Special Norms on Linkage and Economic Group, approved by Resolution SBS No. 445-2000. e. General Law: General Law of the Financial System and the Insurance System and Organic Law of the Superintendence of Banking and Insurance – Law No. 26702 and its modifying norms. f. Related Persons: Natural and legal persons referred to in article 202 of the General Law. The linkage referred to in article 202 of the General Law is defined in the Special Norms on Linkage and Economic Group, approved by Resolution SBS No. 445-2000. g. Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions: Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions, approved by Resolution SBS No. 11356-2008 and its modifying norms.

Article 3°. – Board Approval
Any transfer and acquisition of credit portfolio, regardless of whether it requires authorization from this Superintendence, must be approved by the Board of Directors or the equivalent body of the transferring and acquiring company, respectively, which assumes responsibility for the consequences that may arise from such transfers and acquisitions, as applicable.

TITLE II
OF THE TRANSFER OF CREDIT PORTFOLIO

CHAPTER I
OF GENERAL ASPECTS

Article 4º.- Transfer Modalities
Companies may transfer their credit portfolio through sale, assignment of rights, assignment of contractual position or other contractual modalities. Transfers to related persons must be carried out at fair value, determined according to a technical study indicating the methodology used to determine said value. This technical study must be available to this Superintendence.

Transferring companies are prohibited from repurchasing, swapping or using any mechanism by which they directly or indirectly assume all or part of the credit risk of the portfolio they have transferred. The prohibition does not extend to the following operations:
a) Credit portfolio transfer operations for cash with a repurchase agreement or purchase option that companies carry out with the Central Reserve Bank of Peru. In this case, companies must communicate to this Superintendence the carrying out of such operations within the timeframes indicated in article 8 of this Regulation, attaching the corresponding documentation. b) Credit portfolio transfer operations for cash with a repurchase agreement or purchase option duly authorized by the Superintendence. To obtain authorization, companies must comply with the procedure established in article 7 of this Regulation.

Likewise, regardless of the corresponding sanctions, companies that fail to comply with the provisions of the preceding paragraph shall consider the respective transfer as not carried out for accounting, limit, provision, equity requirement and other prudential measures established in the General Law and in the provisions issued by this Superintendence.

Article 5°.- Transfer through trust
The transfer of credit portfolio through trust, as well as the participation of companies as trustees in trusts, shall be carried out in accordance with the provisions established in the Regulation on Trusts and Fiduciary Service Companies, approved by Resolution SBS No. 1010-99 and its modifying norms.

Article 6°.- Financed Transfer
A financed transfer is considered to be a transfer in which partial or total payment is made after the date on which the transfer of the credit portfolio takes effect or when the payment made by the acquirer corresponds to financing granted by the transferring company or by any of the persons that make up its economic group.

A transfer is considered to be for cash when the form of payment is not included in any of the cases indicated in the preceding paragraph.

Companies may only transfer credit portfolio through financed transfer to persons who, at the time of the operation, are classified in the normal category according to the criteria established in the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions.

Article 7º. - Authorization of the Superintendence
For the transfers indicated in letter b) of the second paragraph of article 4 of this Regulation, as well as for the transfers indicated in this article that require prior authorization from this Superintendence, companies shall submit a request attaching, at least, the information and documentation indicated in Annex A of this Regulation.

These transfers shall only take effect once authorization from this Superintendence is obtained.

Transfers to related persons
Companies must request prior authorization from this Superintendence when the credit portfolio is transferred to persons related to the transferring company, regardless of whether the operation is carried out for cash or in a financed manner, except in the cases of transfers carried out for cash detailed below:
a) If it is a transfer of written-off credit portfolio; or, b) If it is a transfer of non-written-off credit portfolio, provided that the credits are classified as loss and one hundred percent (100%) provisioned.

For the purposes of the exceptions indicated in the preceding paragraph, the transferring company must inform the Superintendence in accordance with the provisions of article 8 of this Regulation.

Transfers to unrelated persons
Companies must request prior authorization from this Superintendence when the credit portfolio is transferred to persons unrelated to the transferring company, except in any of the following cases:
a) If it is a transfer of written-off credit portfolio (cash or financed); b) If it is a transfer of non-written-off credit portfolio, provided that the credits are classified as loss and one hundred percent (100%) provisioned (cash or financed); or, c) If it is a cash transfer through monetary payments, provided that it has been carried out at least at the net book value of specific provisions required.

The transfers of credit portfolio carried out in accordance with the provisions of letters a), b) or c) of the preceding paragraph must be communicated to this Superintendence in accordance with the provisions of article 8 of this Regulation.

Article 8º.- Communication to the Superintendence
The transferring company must communicate to this Superintendence the transfers indicated in this article, attaching the information and documentation indicated in Annex A of this Regulation. This control body may observe the portfolio transfers that have been communicated, and companies must comply with the removal of such observations within the time limit granted for such effect.

Credit portfolio transfers with a repurchase agreement or purchase option in accordance with letter a) of the second paragraph of article 4 of this norm must be communicated to this Superintendence on the next business day following their carrying out.

Regarding credit portfolio transfers to related persons that do not require authorization, in accordance with article 7, the transferring company must communicate its intention to carry out the transfer to the Superintendence at least twenty (20) business days before the transfer, indicating the proposed date.

Credit portfolio transfers to unrelated persons that do not require authorization, in accordance with article 7, must be communicated to this Superintendence within fifteen (15) days following their carrying out.

CHAPTER II
OF PRUDENTIAL MEASURES

Article 9º.- Limits
Transferring companies shall consider the financed transfers they carry out in the calculation of the limits established in the General Law for the outstanding balance due by the acquirer.

In a financed transfer, when the acquirer is not obliged to comply with the limits established in articles 201 to 211 of the General Law, the transferring company must consider in the computation of said limits the debtors of the transferred portfolio proportionally to the outstanding balance due by each debtor.

Regarding portfolio transferred with a repurchase agreement or purchase option, in accordance with letters a) and b) of the second paragraph of article 4 of this norm, the transferring company must continue to compute for the purposes of the limits established in articles 201 to 211 of the General Law, the debtors of the transferred portfolio by the outstanding balance due by each debtor.

Article 10º.- Provisions for credit risk
The company carrying out a financed transfer must provision the outstanding balance due by the acquirer according to the following criteria:

a) When the acquirer is obliged to make provisions for credit risk according to the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions or is a first-category foreign financial system company, provisions shall be made based on the classification of the acquirer. b) When the transferred portfolio is written off or 100% provisioned, provisions shall be made based on the classification of the acquirer. c) In cases not included in the preceding letters, provisions shall be made based on the classification maintained by the debtors on the date of the transfer.

Regarding portfolio transferred for cash with a repurchase agreement or purchase option in accordance with letters a) and b) of the second paragraph of article 4 of this norm, the transferring company must continue to make provisions based on the credit risk of the debtors, in accordance with the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions.

Article 11º.- Equity requirements
The company carrying out a financed transfer must calculate the corresponding effective equity requirements for the outstanding balance, taking into account the following criteria:

a) When the acquirer is obliged to calculate its effective equity requirements in accordance with what is established by this Superintendence, effective equity requirements shall be calculated based on the risk of the acquirer. b) When the transferred portfolio is written off or 100% provisioned, effective equity requirements shall be calculated based on the risk of the acquirer. c) In cases not included in the preceding letters, effective equity requirements shall be calculated based on the risk of the debtors of the transferred portfolio on the date of the transfer.

Regarding portfolio transferred for cash with a repurchase agreement or purchase option in accordance with letters a) and b) of the second paragraph of article 4 of this norm, the transferring company must continue to calculate the effective equity requirements corresponding to said portfolio based on the risk of the debtors.

Article 12°.- Credit Report of Debtors
Companies that transfer portfolio through an operation that implies the write-off of credit portfolios in accordance with the accounting standards established in the Accounting Manual, or that transfer written-off portfolio, shall adhere to the following provisions:

Transfers to related persons
The transferring company will continue to send an additional Credit Report of Debtors (RCD) for each batch of transfer operation, or in an existing batch with the authorization of the Superintendence, when it is a transfer of portfolio to related persons regardless of whether the operation was carried out for cash or financed.

The additional RCD must be sent on a monthly basis, with updated information, until the cancellation of the respective debts, in accordance with the instructions of the Risk Central of this Superintendence.

Transfers to unrelated persons
Regarding transfers to unrelated persons regardless of whether the operation was carried out for cash or financed, the transferring company will report the debtors of the transferred portfolio in the Transferred Portfolios Report-RCT in accordance with the instructions of the Risk Central. The indicated debtors will be reported with their last classification and will not be considered for consolidation or alignment.

Additionally, the transferring company must send this Superintendence updated credit information of the debtors reported in the RCT, whenever the debtor requests their update and always that they prove the partial or total payment of the debt that has been transferred.

Transfers to supervised companies
When the acquiring company is a supervised company with the obligation to send the RCD, there is no obligation for the transferring company to report debtors in an additional RCD or in the RCT, regardless of whether the acquirer is a related or unrelated person to the transferor.

Article 13º.- Additional prudential measures
The Superintendence may establish, for prudential reasons, equity requirements, operational limits and other additional measures to companies that transfer credit portfolio.

Article 14°.- Adaptation of contracts to prudential measures
Contracts for the transfer of credit portfolio entered into by companies must include the necessary stipulations for compliance with the provisions of this chapter.

Likewise, in said contracts, acquiring companies must commit to providing this Superintendence with all the information it requests regarding the transferred portfolio.

Modifications to credit portfolio transfer contracts must be communicated to this Superintendence by the transferring company within five (5) business days of having been carried out.

TITLE III
OF THE ACQUISITION OF CREDIT PORTFOLIO

CHAPTER I
OF GENERAL ASPECTS

Article 15°.- Acquisition Modalities
Companies may acquire credit portfolio through purchase, assignment of rights, assignment of contractual position or other contractual modalities. Acquisitions from related persons must be carried out at fair value, determined according to a technical study indicating the methodology used to determine said value. This technical study must be available to this Superintendence.

Article 16°.- Prohibitions
Companies may not acquire credit portfolio that at some point formed part of their assets or contingent accounts.

Article 17º.- Authorization of the Superintendence
Companies must request prior authorization from this Superintendence when the credit portfolio is acquired from a related person, except if the transferor is a supervised company. For this purpose, companies shall submit a request attaching, at least, the information and documentation indicated in Annex B of this Regulation. These acquisitions shall only take effect once authorization from this Superintendence is obtained.

Article 18º.- Communication to the Superintendence
Regarding acquisitions of credit portfolio not included in the previous article, as well as acquisitions of portfolio from a related person that is supervised, the acquiring company must communicate to this Superintendence within fifteen (15) days following the carrying out of the acquisition, attaching the information and documentation indicated in Annex B of this Regulation.

This control body may observe the portfolio acquisitions that have been communicated, and companies must comply with the removal of such observations within the time limit granted for such effect.

CHAPTER II
OF PRUDENTIAL MEASURES

Article 19º.- Equity requirements, limits and provisions
The credit portfolio acquired, recognized accountingly as assets or contingencies in accordance with the accounting standards established in the Accounting Manual, shall adhere to the provisions referred to effective equity requirements, limits, debtor evaluation, provisions and other norms applicable to the credit portfolio.

Article 20°.- Credit Report of Debtors
Acquiring companies must report in the Credit Report of Debtors (RCD) the debtors of the credit portfolio, recognized accountingly as assets or contingencies in accordance with the accounting standards established in the Accounting Manual.

Article 21°.- Additional prudential measures
The Superintendence may establish, for prudential reasons, equity requirements, operational limits and other additional measures to companies that acquire credit portfolio.

TITLE IV
OF ACCOUNTING ASPECTS AND COMPLEMENTARY INFORMATION

Article 22º.- Accounting Recording
The accounting recording of credit portfolio transfer and acquisition operations shall be carried out taking into account the provisions established in the Accounting Manual.

Article 23rd.- Information on Provisions
For the purposes of what is stipulated in letter c) of Article 10 of this standard, companies must present to this Superintendence, Sections I and II of Annex No. 5-B “Report on Classification of Debtors and Provisions - Transfer of Credit Portfolio” of the Accounting Manual, within fifteen (15) days following the close of each month. Section I shall be submitted in printed form, only once, when a transfer occurs. Section II shall be submitted monthly through the Capture and External Validation Submodule (SUCAVE).

Article Second.- The annexes referred to in the Regulation on the Transfer and Acquisition of Credit Portfolios approved by the first article of this resolution, are published on the Institutional Portal –www.sbs.gob.pe– in accordance with what is stipulated in Supreme Decree No. 001-2009-JUS.

Article Third.- Modify the Annex “Scheduled Activities” of the Internal Audit Regulation, approved by Resolution SBS No. 11699-2008 and its modifying and complementary norms, according to the following:

Incorporate as item 13 and item 8 of Section I “Companies indicated in letters A and B of Article 16 of the General Law (except guaranteeing and surety companies), Banco de la Nación, Banco Agropecuario, Fondo Mivivienda and Corporación Financiera de Desarrollo (COFIDE)” and Section IV “Guaranteeing and surety companies”, respectively, the following text:

“Evaluation of transfer and acquisition operations of credit portfolios”

Article Fourth.- The Accounting Manual for Companies of the Financial System is modified in accordance with the Annex attached to this resolution, which is published on the Institutional Portal –www.sbs.gob.pe– in accordance with what is stipulated in Supreme Decree No. 001-2009-JUS.

Article Fifth.- Modify the Single Text of Administrative Procedures of the Superintendence of Banks, Insurance and Private Pension Fund Administrators, approved by Resolution SBS No. 3082-2011, in administrative procedure No. 37 whose new denomination is “Authorization for the transfer and acquisition of portfolio carried out by companies of multiple operations included in letter A of Article 16 of the General Law, factoring companies, mortgage administrator companies, financial leasing companies, guaranteeing and surety companies, Banco de la Nación, Banco Agropecuario (AGROBANCO), Corporación Financiera de Desarrollo (COFIDE) and Fondo MIVIVIENDA.”, whose modified text is attached to this resolution and is published in accordance with what is stipulated in Supreme Decree No. 004-2008-PCM, regulation of Law No. 29091. (Institutional Portal: www.sbs.gob.pe).

Article Sixth.- Eliminate clause e) of Annex B of the Regulation on the Transfer and Acquisition of Credit Portfolios approved by Resolution SBS No. 1114-99 and its modifying and complementary norms. Likewise, eliminate said requirement in the Single Text of Administrative Procedures of the Superintendence of Banks, Insurance and Private Pension Fund Administrators, approved by Resolution SBS No. 3082-2011, in administrative procedure No. 37.

Article Seventh.- Validity

1. This resolution enters into force as of June 1, 2013, except for what is established in Article six which enters into force as of the day following the publication of this resolution in the Official Gazette El Peruano.
2. From the validity of the new Regulation on the Transfer and Acquisition of Credit Portfolios, the Regulation on the Transfer and Acquisition of Credit Portfolios, approved by Resolution SBS No. 1114-99 and its modifying and complementary norms, is repealed.
3. The modifications to the Accounting Manual established in Article four will govern from the information corresponding to the month of June 2013.

Article Eighth.- The new provisions established for the write-off of assets referred to in the new Regulation on the Transfer and Acquisition of Credit Portfolios, approved by this resolution, as well as the Accounting Manual, will govern for transfer and acquisition operations of credit portfolios carried out as of June 1, 2013.
The sending of the update of the debtors reported in the Transferred Portfolios Report – RCT, referred to in Article 12 of the new Regulation on the Transfer and Acquisition of Credit Portfolios, will govern as of 02.01.2014. 1

Register, communicate and publish,
DANIEL SCHYDLOWSKY ROSENBERG
Superintendent of Banks, Insurance and Private Pension Fund Administrators

Paragraph incorporated by Resolution SBS No. 2848-2013 of 10/05/2013.

ANNEX A
INFORMATION ON CREDIT PORTFOLIO TRANSFER
Transferring companies must present to this Superintendence in accordance with what is indicated in Articles 7 and 8 of this Regulation, at least the following information and documentation:
a. Certified copy of the Board of Directors Act or the competent body in which the credit portfolio transfer operation is approved; b. Contract or draft contract, as applicable, of transfer, in which the identification, responsibilities and rights of the intervening parties will be specified, in accordance with the provisions of this Regulation;
c. A report in which the following information is incorporated at a minimum:
Credit classification of the acquirer in accordance with the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions, in the case of financed transfers; Book value of the portfolio; Sale price of the portfolio, payment modality and periodicity; Profit or loss with respect to book value; Assets or rights that are transferred with the credit portfolio, according to the contract, indicating their respective price; Accounting record of the operation; Effects of the transfer on the effective equity, provisions and global and individual limits of the transferring company; and, List of debtors of the transferred credit portfolio, detailing:

• SBS Code of the debtor;
• Amount, type and characteristics of credits by currency type;
• Classification of the debtor in accordance with the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions;
• Accounting status of the credit;
• Type and value of guarantees, indicating the last date of their valuation, if applicable; and,
• Provisions constituted and required.
  This information must be sent in magnetic media.

ANNEX B
INFORMATION ON CREDIT PORTFOLIO ACQUISITION
Acquiring companies must present to this Superintendence in accordance with what is indicated in Articles 17 and 18 of this Regulation, at least the following information and documentation:
a. Identification of the official or officials from the instance responsible for the approval of the credit portfolio acquisition operation. In the case of acquisitions that require authorization, the certified copy of the Board of Directors Act or the competent body in which the credit portfolio acquisition operation is approved will be sent; b. Draft acquisition contract, in which the identification, responsibilities and rights of the intervening parties will be specified, in accordance with the provisions of this Regulation;
c. List of debtors of the credit portfolio to be acquired, detailing in each case and as applicable:
SBS Code of the debtor;
Amount, type and characteristics of credits by currency type; Classification of the debtor in accordance with the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions; Accounting status of the credit; Type and value of guarantees, indicating the last date of their valuation, if applicable; and, Provisions constituted and required. This information must be sent in magnetic media. d. Indicate if the transferor is the original creditor of the acquired portfolio or if it acquired it from another person, in the latter case indicate its name or corporate name, as applicable, and the date of acquisition; e. Acquisition price of the portfolio, payment modality and periodicity; f. Profit or loss with respect to book value; g. Assets or rights that are acquired with the credit portfolio, according to the contract, indicating their respective price; h. Accounting record of the operation; and,
i. Effects of the acquisition on the effective equity, provisions and on the global and individual limits of the acquiring company.

ANNEX
MODIFICATIONS TO THE ACCOUNTING MANUAL FOR COMPANIES OF THE FINANCIAL SYSTEM
Chapter V “Complementary Information” of the Accounting Manual for Companies of the Financial System is modified in the following terms:

1. In the Methodological Notes of Annex 5-B “Report on Classification of Debtors and Provisions - Transfer of Credit Portfolio”, items 1 and 2 are replaced by the following:
   “1. This annex will be presented only by companies whose transfers are included in letter c) of Article 10 of the Regulation on the Transfer and Acquisition of Credit Portfolios. Section I of this annex will be sent only in printed form, each time the company carries out a transfer. Section II of this annex will be sent through SUCAVE.
2. Indicate the amount of direct and indirect credits transferred under the scope of letter c) of Article 10 of the Regulation on the Transfer and Acquisition of Credit Portfolios according to the coverage it has.”
3. Report No. 25 “Information on Credit Portfolio Transfers, Write-offs and Forgiveness of Credits” is replaced according to the attached format. Likewise, its periodicity is modified from quarterly to monthly, being sent within fifteen (15) calendar days following the close of the month.
4. Report No. 25-A named “Detail of Credit Portfolio Transfers (direct and indirect) Carried Out During the Quarter” is incorporated, according to the attached format. The periodicity of said Report is quarterly, being sent within fifteen (15) calendar days following the close of the quarter, through the software “Capture and External Validation Submodule” (SUCAVE).