Technical Standards for the Authorization of the Establishment of Information Offices of Foreign Banks

CNBCR-09/2024
NRP-81
TECHNICAL STANDARDS FOR THE AUTHORIZATION OF THE ESTABLISHMENT OF INFORMATION OFFICES OF FOREIGN BANKS Approval: 09/23/2024 Validity: 10/09/2024

THE COMMITTEE OF STANDARDS OF THE CENTRAL RESERVE BANK OF EL SALVADOR,

CONSIDERING:
I. That Article 26, second paragraph, of the Banks Law establishes that authorization will be required, even in the case of foreign banks that propose to open offices, to serve as information centers for their clients or to place funds in the country in credits or investments, without conducting passive operations within the national territory. The authorization will be for a period of up to two years and may be extended by the Superintendency of the Financial System for equal periods, provided that the bank meets the legal requirements.
II. That Article 27 of the Banks Law establishes the requirements that foreign banks must meet when proposing to request the authorization referred to in Article 26, second paragraph, of the same Law, from the Superintendency of the Financial System.
III. That Article 28 of the Banks Law sets out the procedure to obtain authorization so that a foreign bank can establish an office in the country.
IV. That Article 29 of the Banks Law establishes that foreign banks authorized to operate in the country will be subject to inspection and supervision by the Superintendency of the Financial System under the same terms as Salvadoran banks.
V. That Article 4, letter e), of the Law on Supervision and Regulation of the Financial System establishes that the Superintendency of the Financial System will have the authority to authorize institutions or entities constituted under foreign laws that propose to operate as offices to serve as information centers for their clients in the country, place funds in the country in credits or investments, as well as to authorize the closure of the same.
VI. That Article 7, letter b), of the Law on Supervision and Regulation of the Financial System establishes that the supervision of information offices of foreign banks established in the country corresponds to the Superintendency of the Financial System.

THEREFORE, by virtue of the regulatory powers conferred upon it by Article 99 of the Law on Supervision and Regulation of the Financial System,

AGREES to issue the following:

CNBCR-09/2024
NRP-81
TECHNICAL STANDARDS FOR THE AUTHORIZATION OF THE ESTABLISHMENT OF INFORMATION OFFICES OF FOREIGN BANKS Approval: 09/23/2024 Validity: 10/09/2024

TECHNICAL STANDARDS FOR THE AUTHORIZATION OF THE ESTABLISHMENT OF INFORMATION OFFICES OF FOREIGN BANKS

CHAPTER I
OBJECT, SUBJECTS AND TERMS

Object
Art. 1.- These Standards aim to establish the procedures and information requirements that foreign banks must comply with, so that the Superintendency of the Financial System authorizes them to open establishments known as offices.

Subjects
Art. 2.- The subjects obliged to comply with the provisions established in these Standards are banks constituted under foreign laws, when they propose to open offices in El Salvador, to serve as information centers for their clients or to place funds in the country in credits or investments.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Central Bank: Central Reserve Bank of El Salvador; b) Foreign Bank: Institutions or entities constituted under foreign laws authorized to operate as banks in their country of origin; c) Law: Banks Law; d) Office: Information centers to place funds in the country in credits or investments, without conducting passive operations within the national territory; e) Superintendency: Superintendency of the Financial System.

CHAPTER II
INFORMATION REQUIREMENTS

Art. 4.- Any foreign bank that proposes to establish an office, to carry out the activities related to in Article 2 of these Standards, must submit an application through the means established by the Superintendency, signed by the legal representative or attorney-in-fact, which must be accompanied by the following information:
a) Deed of incorporation, bylaws, and any other document that proves the legal existence of the head office and the authority to establish information offices abroad; b) Certificate issued by the supervisory body or the organism responsible for the audit of the head office, stating that the requesting entity is authorized to operate as a bank in its country of origin;

c) Resolution of the head office, authorizing the establishment of the office; d) Authorization issued by the organism responsible for the audit of the head office, for the establishment of the office in El Salvador, where applicable; e) Report from the supervisory body of the head office, containing a description of the prudential norms to which it is subject; f) Certification of the resolution of the corresponding body of the requesting institution, in which an express declaration is made that it commits to:
i. Maintain permanently in El Salvador, at least one representative with broad and sufficient powers to carry out all acts and contracts that must be executed and take effect within the national territory; and
ii. Expressly submit to the laws, courts, and authorities of El Salvador, with respect to the acts and contracts entered into within Salvadoran territory and which are to take effect therein.
The power of attorney issued in compliance with the preceding letter i) must be granted clearly and precisely to bind the represented institution to respond unlimitedly inside and outside the country for the acts and contracts entered into in El Salvador; for which purpose, the formalities required by Salvadoran law and those of the country of origin of the head office must be complied with. g) Basic financial statements of the last five years, with the corresponding external auditor's report; h) Report from the supervisory entity of the head office, regarding the financial situation of the latter, for the last five years; i) Ratings of the last five years, issued by internationally recognized rating agencies; and j) Structure of the conglomerate or financial group, including the countries in which said group has a presence and the percentage of share ownership it holds in each of the member companies.

Art. 5.- The documents mentioned in the previous article, except those contained in letters c), f), g) and i), must undergo the apostille procedure, in the case of countries party to the 1996 Convention; otherwise, they must be legalized by the Head of the Diplomatic Mission, Consul, Vice-Consul, or Head of Consular Affairs of El Salvador, or, in their absence, by officials of the Ministry of Foreign Affairs from which such documents originate, and the signature legalizing it must be authenticated by the Minister or Vice Minister of Foreign Affairs of El Salvador, or by the official who has been generally authorized for this purpose. They will also serve as evidence if they are issued by means of photocopies, provided that, by reason written on the reverse of the same, the fidelity of such photocopies is stated and that the formalities required by the law of the country of the head office have been fulfilled. This reason must be signed by the competent official of the country of the head office, and the signature of the latter must be legalized in the manner described in the preceding paragraph.

Art. 6.- Documents emanating from a foreign country, written in a language other than Spanish, to serve as evidence in El Salvador, must be translated into this language by an interpreter appointed by a competent judge or before a notary public of El Salvador, in accordance with the Law on the Practice of Notarial Services in Voluntary Jurisdiction and Other Proceedings. The application and documentation may be submitted through the means made available by the Superintendency, which may be electronic. In any case, the period referred to in the first paragraph of Article 7 of these Standards will begin to run from the next business day following the submission of the application.

CHAPTER III
PROCEDURE FOR THE APPLICATION

Application for authorization to establish information offices of foreign banks Art. 7.- Upon receipt of the application for authorization to establish information offices of foreign banks in accordance with what is established in Articles 4, 5 and 6 of these Standards, the Superintendency will proceed to verify compliance with the requirements defined in the Law and in these Standards, having ninety days following to authorize or deny the application for authorization to establish information offices of foreign banks. If the application is not accompanied by the complete and duly formatted information detailed in Articles 4, 5 and 6 of these Standards, the Superintendency, due to the lack of necessary requirements, may require the applicant to present the missing documents within a period of ten business days counted from the day following the notification, a period that may be extended at the request of the interested party when there are reasons justifying it. The Superintendency in the same notice will indicate to the applicant that if they do not complete the information within the aforementioned period, it will proceed without further procedure to archive the application, leaving their right to submit a new application intact. If after the analysis of the documentation presented in accordance with Articles 4, 5 and 6 of these Standards, the Superintendency has observations or when the documentation or information presented does not prove sufficient to establish the facts or information intended to be accredited; the Superintendency will notify the respective applicant to remedy the deficiencies communicated to them or present additional documentation or information requested. The applicant will have a maximum period of ten business days counted from the day following the notification, to resolve the observations or present the additional information required by the Superintendency. The Superintendency may, through a reasoned resolution, extend by up to another ten business days the period indicated in the preceding paragraph, when the nature of the observations or deficiencies notified so requires.

Extension Period
Art. 8.- The applicant may submit to the Superintendency an application for extension of the period indicated in the fifth paragraph of Article 7 of these Standards, before the expiration of said period, must express the grounds on which it is based and propose, if applicable, the relevant proof. The extension period may not exceed ten business days and will begin from the next business day following the expiration date of the original period.

Suspension of the Period
Art. 9.- The ninety-day period indicated in the first paragraph of Article 7 of these Standards, will be suspended for the days that elapse between the notification of the request for information or documentation referred to in the second and fifth paragraphs of said article, until the observations required by the Superintendency are remedied. In addition to the information required from foreign banks, the Superintendency must have a report from the Central Bank.

Resolution
Art. 10.- Upon receipt of the report from the Central Bank, the Superintendency will approve or deny the application for authorization to establish information offices of foreign banks. In the event that this resolution is favorable, the registration in the Commercial Registry of the constitutive instruments of the institution in question or a certification of the same will be authorized therein. The authorization will be for a period of up to two years and may be extended for equal periods with prior authorization of the Superintendency. The Superintendency will proceed to notify the applicant of the corresponding resolution within a maximum period of three business days, from the date of its issuance.

Authorization of extension of information offices of foreign banks Art. 11.- The foreign bank with an authorized office must submit to the Superintendency the application for extension of the authorization within the sixty days prior to its expiration, must comply for such purposes with the following requirements:
a) Application signed by the legal representative through the means established by the Superintendency; b) Resolution of the head office to extend the establishment of the accredited information office in the country; c) Updated rating of the head office, issued by an internationally recognized rating agency; d) Certification or certificate from the supervisory body of the head office, to extend the operations of the office in El Salvador for two years; e) Renewal of the declaration of the head office in the terms expressed in letter f) of Article 4 of these Standards and the corresponding power of attorney; and f) Inventory of the credit portfolio placed in El Salvador at the close of the month prior to the date of submission of the application in Excel format and which must at least contain the following fields: tax identification number, name of the debtor, amount placed in United States dollars, interest rate, principal and interest balance, grant date, maturity date, destination of funds, and category of the debtor, where applicable. The documents mentioned above, except those contained in letter b) and f), must undergo the apostille or legalization procedure as applicable, in the same manner as mentioned for the establishment of information offices, in Article 5 of these Standards. The application and documentation may be submitted through the means made available by the Superintendency, which may be electronic. In any case, the period referred to in the first paragraph of Article 12 of these Standards will begin to run from the next business day following the submission of the application.

Procedure for authorization of extension of information offices of foreign banks Art. 12.- Upon receipt of the application for authorization of extension of information offices of foreign banks in accordance with what is established in Article 11 of these Standards, the Superintendency will proceed to verify compliance with the requirements defined in the Law and in these Standards, having sixty days following to authorize or deny the application. If the application is not accompanied by the complete and duly formatted information detailed in Article 11 of these Standards, the Superintendency, due to the lack of necessary requirements, may require the applicant to present the missing documents within a period of ten business days counted from the day following the notification, a period that may be extended at the request of the interested party when there are reasons justifying it. The Superintendency in the same notice will indicate to the applicant that if they do not complete the information within the aforementioned period, it will proceed without further procedure to archive the application, leaving their right to submit a new application intact. If after the analysis of the documentation presented in accordance with Article 11 of these Standards, the Superintendency has observations or when the documentation or information presented does not prove sufficient to establish the facts or information intended to be accredited; the Superintendency will notify the respective applicant to remedy the deficiencies communicated to them or present additional documentation or information requested. The applicant will have a maximum period of ten business days counted from the day following the notification, to resolve the observations or present the additional information required by the Superintendency. The Superintendency may, through a reasoned resolution, extend by up to another ten business days the period indicated in the preceding paragraph, when the nature of the observations or deficiencies notified so requires.

Extension Period
Art. 13.- The applicant may submit to the Superintendency an application for extension of the period indicated in the fifth paragraph of Article 12 of these Standards, before the expiration of said period, must express the grounds on which it is based and propose, if applicable, the relevant proof. The extension period may not exceed ten business days and will begin from the next business day following the expiration date of the original period.

Suspension of the Period
Art. 14.- The sixty-day period indicated in the first paragraph of Article 12 of these Standards, will be suspended for the days that elapse between the notification of the request for information or documentation referred to in the second and fifth paragraphs of said article, until the observations required by the Superintendency are remedied.

Resolution
Art. 15.- Once the complete and duly formatted documents are presented, the Superintendency will issue the resolution in which it authorizes or denies the application for authorization of extension of the establishment of information offices of foreign banks, and will proceed to notify the applicant within a maximum period of three business days from the day the resolution is issued.

Art. 16.- Upon compliance with the requirements for the establishment or extension of the information office, the Superintendency will publish the corresponding resolution at the expense of the Branch, in the Official Diary and in two printed media of national circulation or another digital publication platform with greater or equal coverage, or on its website, in accordance with what is established in the current legal framework.

Art. 17.- The resolution issued by the Superintendency for the office to start its operations, will be for a maximum period of six months, upon expiration of which it will become void.

CHAPTER IV
OTHER PROVISIONS AND VALIDITY

Art. 18.- The Superintendency may suspend the authorization to operate of the information offices of foreign banks, when they conduct passive operations or fail to comply with any of the provisions or requirements established in these Standards or in the Law, without prejudice to criminal liabilities that may arise.

Sanctions
Art. 19.- Non-compliance with the provisions contained in these Standards, will be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System.

Repeal
Art. 20.- These Standards repeal
-12), approved by the Board of Directors of the Superintendency of the Financial System in Session No. CD-38/2001 of August 1, 2001, whose Organic Law was repealed in accordance with Legislative Decree No. 592 which contains the Law on Supervision and Regulation of the Financial System, published in the Official Diary No. 23, Volume No. 390, dated February 2, 2011.

Transitory
Art. 21.- Standards for
Authorize the Establishment of Information Offices of Foreign Banks NPB1-
12) and which were in process at the time these Standards enter into force, will be continued and concluded in accordance with the regulations under which they began.

Unforeseen Aspects
Art. 22.- Aspects not provided for in regulatory matters in these Standards, will be resolved by the Central Bank, through its Committee of Standards.

Validity
Art. 23.- These Standards will enter into force as of October 9, two thousand twenty-four.