Resolution SBS No. 1378-2021: Amending the Regulation for the Consolidated Supervision of Financial and Mixed Conglomerates

Lima, May 5, 2021

RESOLUTION SBS
No. 01378-2021

The Superintendent of Banking, Insurance and Private Pension Fund Administrators

CONSIDERING:

That, through Resolution SBS No. 11823-2010 and its amendments, the Regulation for the Consolidated Supervision of Financial and Mixed Conglomerates, hereinafter the Consolidated Supervision Regulation, was approved;

That, it is necessary to make modifications to the Consolidated Supervision Regulation, as a result of experience in supervision, as well as to improve its consistency with the provisions applicable to individual information, and to improve the analysis of the information submitted by supervised companies;

That, likewise, it is necessary to adapt the calculation of consolidated effective equity to international standards, specifically with regard to the computation in the consolidated effective equity of the portion that comes from non-controlling interests of the companies that are part of the consolidable group;

That, for the purpose of collecting public opinions on the proposal, the pre-publication of the draft regulation was ordered on the electronic portal of the Superintendence, under the provisions of Supreme Decree No. 001-2009-JUS and its amendments;

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

In exercise of the powers conferred by numbers 7, 9 and 13 of Article 349 of the General Law of the Financial System and the Insurance System and the Organic Law of the Superintendence of Banking and Insurance approved by Law No. 26702 and its amendments;

RESOLVES:

Article First.- Modify the Regulation for the Consolidated Supervision of Financial and Mixed Conglomerates, approved by Resolution SBS No. 11823-2010 and its amendments, in the terms indicated below:

1. Replace letter f) of Article 2° "Definitions", with the following:

f) Financing: Direct credits, accounts receivable, financial leases, investments, the credit exposure equivalent of derivative operations and the credit risk equivalent exposure of contingent credits, with the exception of unused credit lines and approved but undrawn credits, whose commitments can be terminated or cancelled unilaterally by the company at any time. These concepts shall be understood in accordance with the current regulations on concentration limits.

2. Modify number 3 and incorporate number 5 in letter C of Article 6° "Calculation of the effective equity of the consolidable group", according to the following text:

"3. Regarding the consolidable group of the financial system, the amount by which the investment in capital-representative instruments in a real sector company not belonging to the conglomerate and not considered in the trading portfolio exceeds fifteen percent (15%) of the effective equity of the consolidable group; as well as the amount by which the total investment in capital-representative instruments in real sector companies not belonging to the conglomerate and not considered in the trading portfolio exceeds sixty percent (60%) of the effective equity of the consolidable group. The effective equity referred to in this number shall be calculated without including numbers 3, 4 nor 5 of this letter.

5. The portion of the difference between the consolidated effective equity and the consolidated capital requirement that comes from any equity element or subordinated debt that does not correspond to holders of controlling participations of the companies that are part of the consolidable group that are subject to risk-based regulatory capital. This portion shall be calculated according to the following procedure and shall correspond to the sum of the results obtained in d).

a) For each company that is part of the consolidable group that is subject to risk-based regulatory capital and that in turn contributes to the consolidated effective equity with any equity element or subordinated debt that does not correspond to holders of controlling participations, consider its effective equity or similar according to the applicable individual legislation.

b) Calculate the excess between the amount considered in a) and the capital requirement of that company calculated according to the applicable individual legislation.

c) If the result obtained in b) is greater than zero, calculate the sum of the equity elements and subordinated debt of the company computed in the consolidated effective equity that do not correspond to holders of controlling participations, otherwise consider zero.

d) Divide the result obtained in c) by the amount considered in a) and multiply that ratio by the amount obtained in b)."

3. Modify letters a) and b) of number 2. of Article 8° "Capital requirements of the consolidable group", as follows:

"a) Ten percent (10%) of the total assets without considering those generated by operations carried out between companies of the conglomerate that belong to the same consolidable group, nor the assets that have been deducted from the effective equity of the consolidable group.

b) Calculate the percentage of the total assets that does not correspond to those generated by operations carried out between companies of the conglomerate that belong to the same consolidable group nor to assets that have been deducted from the effective equity of the consolidable group. Apply the previously calculated percentage to the sum of paid-in capital, legal and discretionary reserves, supplementary capital premium, and profits from previous and current fiscal years on which there are capitalization commitments by the corresponding corporate bodies, deducting losses from previous and current fiscal years."

4. Incorporate number 5 in letter C of Article 10° "Calculation of the effective equity of the financial group" according to the following text:

"5. The portion of the difference between the consolidated effective equity and the consolidated capital requirement that comes from any equity element or subordinated debt that does not correspond to holders of controlling participations of the companies that are part of the financial group that are subject to risk-based regulatory capital. This portion shall correspond to the sum of a) and b).

a) The sum of the amounts deducted for both consolidable groups calculated according to what is established in number 5 of letter C of Article 6°.

b) In case there are companies in any of the consolidable groups for which the deductions indicated in a) have not been determined, that are subject to risk-based regulatory capital and that contribute to the consolidated effective equity of the financial group with any equity element or subordinated debt that does not correspond to holders of controlling participations; the deductions calculated under the same procedure indicated in number 5 of letter C of Article 6° for each of these companies."

5. Replace Article 12° "Deficit with respect to the capital requirement" with the following:

"When a consolidable group or the financial group presents a capital deficit with respect to the minimum required in Articles 5° or 9° above, respectively, the supervised company responsible for submitting information, according to Article 21° of this Regulation, must immediately communicate such situation to this Superintendence and must submit for approval an adequacy plan in accordance with what is provided in Article 18° of this Regulation within a period not greater than forty (40) calendar days following the date of closure of the quarter in which the deficit was registered, unless this is the fourth quarter in which case the maximum period shall be fifty (50) calendar days.

When the deficit is less than or equal to twenty percent (20%) of the minimum required in Articles 5° or 9° of this Regulation, the supervised companies belonging to the consolidable group or financial group to which the deficit corresponds must submit to the prior authorization of the Superintendence the distribution of their profits. Likewise, in case said deficit results higher than the aforementioned limit, the supervised companies belonging to the consolidable group or financial group to which the deficit corresponds must allocate the entirety of the net profits to capitalization to overcome the deficit."

6. Replace Article 14° "Concentration limit on financing applicable to the consolidable group of the financial system" according to the following text:

"The total financing that the companies of the consolidable group of the financial system grant in favor of the same natural person, legal person or legal entity, or group of natural persons, legal persons or legal entities that represent unique risk in accordance with what is provided in Article 16 of this Regulation, may not exceed thirty percent (30%) of the effective equity of said consolidable group.

When a financing has guarantees or instruments applicable for the substitution of counterparty referred to in Article 212° of the General Law, the concentration limit shall be computed based on the issuer of said guarantee or instrument and for the amount of the substituted portion of the financing.

Likewise, the total financing mentioned in the first paragraph must be subject to the following sub-limits, computed on the effective equity of said consolidable group:

1) The total financing granted to a natural person or legal person or legal entity that does not belong to the financial system cannot exceed the limit of twenty percent (20%). This limit may be extended up to the equivalent of thirty percent (30%), provided that at least an amount equivalent to the excess over said limit corresponds to financial leasing operations or there are guarantees contemplated in Article 209 and in numbers 1 and 2 of Article 211 of the General Law, in accordance with the regulations governing said articles.

2) The total financing granted to a company of the financial system, including deposits made in it; added to the guarantees, bonds and other guarantees that have been received from said company up to the amount of the financing that has been substituted; cannot exceed ten percent (10%) if it is an institution not subject to supervision by bodies similar to the Superintendence and thirty percent (30%) if it is an entity supervised by the Superintendence, by bodies similar to it, or if they are first-category foreign banks.

The sub-limit of thirty percent (30%) of number 2) and consequently the total limit of thirty percent (30%) may be extended to fifty percent (50%) of the effective equity of the consolidable group when the excess is represented by letters of credit received from companies of the financial system of the country or abroad. Exposures to companies of the financial system of the country or abroad resulting from letters of credit payable in accordance with the Agreement on Payments and Reciprocal Credits – ALADI will not be considered for limit purposes."

7. Modify the first paragraph of Article 17° "Excess of Limits" according to the following text:

"In case the consolidable group presents an excess over the limits indicated in this Chapter, the company responsible for submitting information will communicate this situation to this Superintendence immediately and must submit for approval an adequacy plan in accordance with what is provided in Article 18° of this Regulation within a period not greater than forty (40) calendar days following the date of closure of the quarter in which the excess was registered, unless this is the fourth quarter in which case the maximum period shall be fifty (50) calendar days."

8. Incorporate letter f) in Article 18° "Adequacy Plans" according to the following text:

"f. The plan must be approved by the Board of Directors and signed by the General Manager and the General Accountant of the company responsible for submitting information.

9. Replace the heading of the first paragraph of Article 19° "Additional prudential measures", with the following:

"With the purpose of mitigating the exposure to the risks faced by consolidable groups and reinforcing the effectiveness of consolidated supervision, the Superintendence may order supervised companies to adopt the following prudential measures:"

10. Replace the term "annual" with "quarterly" in letters b) of the sections "Financial Statements" of paragraphs B), C) and D) of Article 20° "Information required for consolidated supervision".

11. Repeal numbers 2 and 6 of Article 20° "Information required for consolidated supervision".

12. Incorporate as letter g) of the complementary information of letter C and as letter j) of the complementary information of letter D of Article 20° "Information required for consolidated supervision", the following:

"Legal persons or legal entities that make up the consolidable groups, quarterly, in accordance with what is provided in Annex No. 1".

13. Modify the first paragraph of Article 21° "Company responsible for submitting information", according to the following text:

"The complete and timely presentation of the information required by this Regulation and that corresponding to the unsupervised companies that make up the conglomerate, shall be the responsibility of the company supervised by this Superintendence. When there is more than one supervised company that makes up the financial group or consolidable group, the company responsible for submitting information shall be that which has the largest participation in the assets of the group. In cases where it is not possible to determine said company, the Superintendence shall determine the responsible one."

14. Modify the heading of the first paragraph of Article 23° "Notes to consolidated financial statements and additional information" according to the following text:

"The consolidated financial statements of the consolidable group or, when applicable, of the financial group corresponding to the fourth quarter must incorporate as general notes, the following:"

15. Modify the second paragraph of Article 23° "Notes to consolidated financial statements and additional information", according to the following text:

"Likewise, the consolidated financial statements of the consolidable group or, when applicable, of the financial group corresponding to the fourth quarter must incorporate as specific notes the detail of the following:

a) available funds and interbank funds,

b) financial investments,

c) credit portfolio, net,

d) participations in subsidiaries, associates and joint ventures,

e) investment properties,

f) real estate, furniture and equipment, net,

g) goodwill and intangible assets,

h) accounts receivable and other assets, net; and accounts payable, provisions and other liabilities,

i) obligations to the public,

j) debts and financial obligations,

k) liabilities from insurance contracts,

l) deferred asset and liability for income tax,

m) interest income and similar; interest expense and similar,

n) other income and expenses,

o) income from premiums and earned contributions net,

p) losses incurred from life insurance contracts and others,

q) administration and sales expenses,

r) transactions with shareholders, related parties and affiliated companies."

16. Replace the name of Title IV with "OF RISK MANAGEMENT"

17. Modify the first paragraph of Article 28° "Report on risk management", according to the following text:

"The company responsible for submitting information must present annually to this Superintendence, and within a period not greater than ninety (90) calendar days following the closure of the fiscal year, the Report on risk management of the consolidable group or, when applicable, of the financial group, whose minimum content shall be the following:"

Article Second.- Create Annex 8-D and replace Annexes No. 2, 2-A, 2-B, 3, 3-A, 3-B, 3.1, 3.1-A, 3.1-B, 6, 6-A, 6-B, 7, 7-A, 7-B, 7.1, 7.1-A, 7.1-B, 8, 8-A, 8-B, 8-C, 9, 11 and 14-A of the Regulation for the Consolidated Supervision of Financial and Mixed Conglomerates, approved by Resolution SBS No. 11823-2010 and its amendments, which are published on the Institutional Portal (www.sbs.gob.pe), in accordance with what is provided in Supreme Decree No. 001-2009-JUS. Regarding this, the following must be taken into account:

1. In annexes 2, 2-A, 2-B 6, 6-A and 6-B, the amounts corresponding to the item "Various Accounts Receivable" which is eliminated, are recorded in the item "Accounts Receivable".

2. In Annexes 2, 2-B, 6 and 6-B, the amounts corresponding to the item "Accounts Receivable from operations subject to credit risk" which is eliminated, are recorded in the item "Accounts Receivable".

3. In Annexes 2-A and 6-A, the amounts corresponding to the item "Various Accounts Payable" which is eliminated, are recorded in the item "Accounts Payable".

4. In Annexes 2, 2-B, 6 and 6-B, the name of the item "Various Accounts Payable" is replaced by "Accounts Payable".

5. In Annexes 3 and 7, the amounts corresponding to the item "Operating Income" which is eliminated, are recorded in the item of the section "Operating Income" that corresponds.

The amounts corresponding to the item "Cost of other operating income" which is eliminated, are recorded in the item of the section "Cost of Operating Income" that corresponds.

6. In Annexes 3-A and 7-A the amounts corresponding to the items "Other operating income" and "Costs of other operating income" which are eliminated, are recorded in the items that correspond to the sections "Income" or "Expenses".

7. In Annexes 3, 3-A, 7 and 7-A the amounts corresponding to the items "Other financial income" and "Other financial expenses" which are eliminated, are recorded in the item "Other income and other expenses". Likewise, the amounts corresponding to the item "Sales Expenses" which is replaced by the item "Depreciations and Amortizations", are recorded in the expense items that correspond.

Article Third.- This Resolution shall enter into force on June 1, 2022.

Register, communicate and publish,

MARIA DEL SOCORRO HEYSEN ZEGARRA
SUPERINTENDENT OF BANKING, INSURANCE AND AFP