Technical Standards for the Preparation of Recovery Plans

NRSF-04
RECOVERY
Approval: 19/03/2026
Validity: 06/04/2026

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

CONSIDERING:
I. That Article 12, first paragraph, of the Law for the Stability of the Financial System and Deposit Guarantee, establishes that all entities regulated by Article 2 of said Law will elaborate and maintain updated a Recovery Plan, which must contemplate the measures and actions that the entity will adopt in order to restore its financial position in the event that a deterioration of the same occurs.
II. That Article 12, ninth paragraph, of the Law for the Stability of the Financial System and Deposit Guarantee, establishes that the Central Bank, through the Committee of Standards, will issue the pertinent technical standards relative to the content of the Recovery Plans and the terms of their presentation.
III. That Article 35, letter d), of the Law of Supervision and Regulation of the Financial System, establishes that the members of the financial system must adopt and update policies and mechanisms for risk management, including among other actions, identifying, evaluating, mitigating, and disclosing them in accordance with international best practices. In said policies, measures to be adopted to prevent possible non-compliance with regulatory requirements and those to be adopted in the event of having incurred in them must be included, defining in both situations the parameters that will guide the action and the persons responsible for implementing them.
IV. That Article 42, first paragraph, of the Law of Supervision and Regulation of the Financial System, establishes that in the event that a member of the financial system shows difficulties in complying with the technical relations that are exigible to it, or exhibits deficient management of the risks that may affect its level of liquidity, solvency, or the integrity of the markets, the Board of Directors of the Superintendency of the Financial System, based on technical reports and without prejudice to applying what is established in the specific laws, may preventively require the immediate implementation of the measures that had been defined by the member of the financial system, in accordance with what is provided in letter d) of Article 35 of the aforementioned Law.
V. That Article 99, third paragraph, letter a), of the Law of Supervision and Regulation of the Financial System, establishes that it corresponds to the Committee of Standards to issue resolutions on the approval of technical standards, instructions, and provisions that the laws regulating the supervised entities establish must be issued to facilitate their application, especially those relative to solvency, liquidity, provisions, reserves, classification of risky assets, criteria for establishing the need for consolidation, good corporate governance practices,

NRSF-04
RECOVERY
Approval: 19/03/2026
Validity: 06/04/2026 transparency of information and on any other aspect inherent to risk management by the supervised entities.

THEREFORE,

in virtue of the regulatory powers conferred by Article 99 of the Law of Supervision and Regulation of the Financial System,

AGREES, to issue the following:
TECHNICAL STANDARDS FOR THE PREPARATION OF RECOVERY PLANS

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards have as their object to establish the minimum content of the recovery plans, which must be elaborated and implemented by the subjects obliged to comply with them, in the event that situations arise that may affect their financial, economic, and legal situation; as well as the execution of their activities under normal conditions.

Subjects
Art. 2.- The subjects obliged to comply with the provisions established in these Standards are:
a) Banks and branches of foreign banks regulated by the Bank Law; b) Savings and Credit Societies established according to the Law that regulates Savings and Credit Societies; and c) Other banks, regulated according to current Laws.
The application of these Standards is exempted for the Agricultural Development Bank, the Development Bank of the Republic of El Salvador (BANDESAL), and Investment Banks as provided in their special Law.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Senior Management: the Executive President, Executive Director, General Manager, or whoever acts in their place, and the executive positions that report to them; b) Central Bank: Central Bank of Reserve of El Salvador; c) Entity: Subject obliged to comply with the provisions established in these Standards; d) Essential or critical functions: Those activities, services, or operations whose sudden cessation could cause interruptions in the real economy, financial contagion, or systemic instability; e) Board of Directors: collegial body or equivalent body in charge of the administration of the entity, with supervision, direction, and control functions; in the case of Cooperative Associations, it will be the Board of Administration or as defined in its Creation Law; f) Law: Law for the Stability of the Financial System and Deposit Guarantee; g) Recovery Plan: Document that contains the measures and actions that entities will implement in order to restore their financial position in the event that a deterioration of the same occurs; and h) Superintendency: Superintendency of the Financial System.

CHAPTER II
ON RECOVERY PLANS

Object of the recovery plan
Art. 4.- The recovery plan has as its object to guide the timely action of the entity's administration, to restore the entity's financial position in the event that a deterioration of the same occurs. The foregoing, with the purpose of facilitating the financial stability of the entity and guaranteeing to clients and users the provision of services.

Approval of the recovery plan
Art. 5.- The recovery plan and its updates will be approved by the Board of Directors of the entity. The referred plan and its updates must be sent by each entity for review to the Superintendency within a period not greater than ten days after having been approved, in accordance with Article 12 of the Law. The recovery plan may be presented through the means made available by the Superintendency, which may be electronic. The recovery plan will be coherent with the entity's strategic and business plan; likewise, it must be in accordance with the nature, size, risk profile, importance in payment systems, and its impact on the stability of the financial system of the country.

Minimum content of the recovery plan
Art. 6.- The recovery plan must contain as a minimum the following elements:
a) Definition of the titular and alternate persons responsible for elaborating, implementing, and updating the plan, detailing the areas or positions they exercise within the entity; b) Corporate Governance structure involved in the process of elaboration and approval of the plan, as well as the detail of the directives that compete to each organ of this structure within the recovery plan, the processes under their charge, their functions, and responsibilities in the follow-up and execution of the recovery plan; c) Description of how the recovery plan integrates with the entity's risk management framework; d) Description of the entity's business model and its business lines; e) Identification of business lines, and of the essential services and functions for the normal operation of the entity, in order to design the measures and their corresponding financial recovery actions that allow them to keep them afloat in moments of financial stress; f) Inventory of components or technological resources related to the essential services and functions for the normal operation of the entity; g) Early Warning Indicators designed to timely identify adverse trends that may affect the financial solidity of the entity and their mitigating measures to reduce risks; h) Quantitative and qualitative indicators that will be subject to follow-up in the recovery plan, designed to timely detect the deterioration of the financial and operational situation of the entity, and allow the activation of recovery measures. Among these indicators, solvency, delinquency, liquidity, asset quality, profitability, risk concentration, access and stability of financing sources indicators must be included, as well as qualitative indicators related to market conditions, corporate governance, and reputational risks, defining for each of the indicators thresholds, alert levels, and monitoring responsibilities; i) Financial recovery measures and their corresponding actions to face idiosyncratic and/or systemic stress situations that may affect the entity, such as market disturbances, deterioration of its credit portfolio quality, liquidity pressures, macroeconomic shocks, and other internal or external events to the entity. Such measures must detail under which stress scenarios they will be applied and what will be their activation mechanisms, the projected time to implement such measures, the expected impacts on solvency, liquidity, and profitability, as well as the evaluation of associated risks. Recovery measures must consider at least two stress scenarios. Likewise, when applicable, these scenarios must incorporate elements that allow identifying and analyzing the interconnections within a conglomerate, as well as the possible contagion effects between the entities that make it up; j) Detail of the general processes to guarantee the timely implementation of financial recovery measures and their actions, according to the internal policy of each entity; and k) Timely and appropriate
communication plan directed to internal and external stakeholders during the entity's financial recovery process. Said plan must contemplate the channels, persons responsible, and authorization levels for internal communication, as well as the coordination and communication strategy to the corresponding national authorities, the entity must also detail the way in which it will be determined if it is necessary to issue a message to the public. The recovery plan cannot include access to any form of state financing or liquidity assistance.

Review of the recovery plan
Art. 7.- The Superintendency will evaluate the recovery plan of the entities and its updates, and in particular, the extent to which this satisfies the requirements established in Article 6 of these Standards, as well as the possibilities that the recovery plan offers to maintain or restore the viability of the entity in an agile and effective manner. In carrying out this evaluation, the Superintendency may require the entity to include in the Plan measures tending to:
a) Reduce its risk profile; b) Review its business strategy and its legal and organizational structure; c) Modify the financing strategy to improve the solidity of the main areas of activity and of essential financial services; and d) Make changes in its corporate governance. Once the recovery plan or its updates are presented, the Superintendency will proceed to evaluate it within a period not greater than thirty days after receipt, in accordance with Article 12 of the Law.

Art. 8.- If derived from the review of the recovery plan and its updates, the Superintendency concludes that there are aspects that must be remedied, it will communicate its observations to the entity by the means it deems convenient, having this the opportunity to make the indicated adjustments, within a period of thirty days counted from receipt of said communication, in accordance with Article 12 of the Law to present the modified recovery plan. If the entity does not present a modified recovery plan or if the Superintendency determines that the modified recovery plan does not adequately solve the deficiencies detected in the initial evaluation and it is not possible to remedy said deficiencies through specific modifications of said plan, the Superintendency will request the entity to identify within a period that cannot exceed ten business days, the changes it can introduce in its activity to remedy the deficiencies of the plan or the impediments for its application. The obligation to present the recovery plan will be considered fulfilled until the entity has remedied the observations made by the Superintendency. If the corrected recovery plan is presented correctly, the Superintendency will communicate to the entities within a maximum period of three business days after having given compliance with the presentation of the plan. The recovery plan and its updates are confidential, so it will be communicated by the Superintendency only to the Central Bank and the Deposit Guarantee Institute within the next ten business days after having given compliance with the presentation of the plan.

Update of the recovery plan
Art. 9.- The entity must update the recovery plan annually, for which it must send it to the Superintendency within the first quarter of each year, or when any of the following situations occur:
a) Whenever a change in the legal, organizational, or ownership structure of the entity or in its financial situation that could significantly affect the Plan or require changes to it; or b) Whenever the Superintendency, based on technical reports, deems it convenient.

The recovery plan and its updates must be sent to the Superintendency for review and evaluation in accordance with what is established in Articles 7 and 8 of these Standards.

CHAPTER III
ROLES AND RESPONSIBILITIES

Responsibilities of the Board of Directors
Art. 10.- The Board of Directors of the entity will have the following responsibilities:
a) Approve the recovery plan, as well as its update, which must be done annually in accordance with what is established in Article 9 of these Standards; b) Instruct that the recovery plan be disseminated to the key personnel of its execution; c) Designate key personnel who identify and evaluate the parameters of the indicators established in the recovery plan; d) Designate within the corporate governance structure, the organizational units in charge of executing the activities related to the recovery plan and appoint the persons responsible for its execution; and e) Designate the members of the Committee for the financial recovery of the entity, in accordance with what is established in Article 12 of these Standards.

Responsibilities of key personnel
Art. 11.- The key personnel to whom the Board of Directors has designated the responsibility of identifying and evaluating the parameters of the indicators established in the recovery plan, will be responsible for executing the necessary mitigation actions, recommending concrete actions to overcome any situation that may put the financial stability of the entity at risk, and informing Senior Management.

Functions of the Committee for the financial recovery of the entity Art. 12.- Entities must have a Committee for the financial recovery of the entity, which must be composed of at least three people, and will be presided over by one of the directors of the Board of Directors, who has knowledge in finance and risk management. Among the functions of the financial recovery Committee, the following are found:
a) Evaluate the recovery plans regarding the situation of the entity, in order to inform the Board of Directors of any situation that could activate the plan; b) Propose with reasoned basis the necessary adjustments to the recovery plans or to the strategic and business plans, as appropriate, in order to adapt them to the real economic and financial situation and to the risk profile of the entity; c) Define the quantitative and qualitative indicators subject to follow-up of the recovery plans; d) Ensure compliance with regulatory requirements in matters of recovery plans and attend to information requirements by the Superintendency; e) Inform in a timely and documented manner to the Board of Directors about the execution and deactivation of recovery measures; and f) Follow up on the compliance with some of the measures of the recovery plan according to the requirement of the Superintendency. Based on the size, nature, complexity of products, services, and operations of the entity, the function of the Committee for the financial recovery of the entity may be performed by the specialized unit or area of the entity that the Board of Directors designates for such purposes.

CHAPTER IV
OTHER PROVISIONS AND VALIDITY

Sanctions
Art. 13.- Non-compliance with the provisions contained in these Standards will be sanctioned in accordance with what is established in the Law of Supervision and Regulation of the Financial System.

Derogation
Art. 14.- These Standards derogate the "Technical Standards for the Preparation of Financial Recovery Plans" (NR SF-02), approved by the Committee of Standards of the Central Bank in Session No. CN-03/2022, of April 11, 2022.

NRSF-04
RECOVERY
Approval: 19/03/2026
Validity: 06/04/2026

Transitory
Art. 15.- Entities will have ninety business days from the validity of these Standards, to present to the Superintendency for its review, the first recovery plan referred to in Article 6 of these Standards.
Subsequently, they must send the information observing what is established in Article 9 of these Standards.

Unforeseen Aspects
Art. 16.- The aspects not provided for in regulatory matters in these Standards, will be resolved by the Central Bank through its Committee of Standards.

Validity
Art. 17.- These Standards will enter into force from the sixth of April of two thousand twenty-six.