Technical Standards for the Preparation of the Quarterly Financial Report

NRP-69
QUARTERLY FINANCIAL
Approval: 06/28/2024
Validity: 07/16/2024

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

CONSIDERING:

I. That the first paragraph of Articles 225 of the Banks Law and 58 of the Investment Banks Law establish that banks and investment banks must prepare a quarterly financial report that must be sent to the Superintendency of the Financial System and made available to the public in the offices of the banks and investment banks, for the purpose of informing about the liquidity and solvency situation of the respective banks. (1)

II. That Article 161, first paragraph, of the Law on Cooperative Societies and Savings and Credit Companies establishes that the provisions of the Banks Law contained in Title Seven, regarding General Provisions, shall apply to savings and credit companies.

III. That Article 2, first paragraph, of the Law on Supervision and Regulation of the Financial System establishes that the Financial Supervision and Regulation System has the objective of preserving the stability of the financial system and ensuring its efficiency and transparency, as well as ensuring the safety and solidity of the members of the financial system in accordance with what this Law, other applicable laws, regulations, and technical standards issued for this effect establish, all in concordance with best international practices on the matter.

IV. That Article 99, third paragraph, letter a), of the Law on Supervision and Regulation of the Financial System establishes that it is the responsibility of the Committee of Standards of the Central Reserve Bank of El Salvador to approve technical standards, instructions, and provisions that the laws regulating the supervised entities establish must be issued to facilitate their application, especially those related to solvency requirements, liquidity, provisions, reserves, classification of risky assets, criteria for establishing the need for consolidation, good corporate governance practices, information transparency, and on any other aspect inherent to risk management by the supervised entities.

V. That Article 101, fourth paragraph, of the Law on Supervision and Regulation of the Financial System establishes that the powers to approve, modify, and repeal technical standards that must be complied with by the members of the financial system and other supervised entities are transferred to the Central Reserve Bank of El Salvador.

THEREFORE,

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

NRP-69
QUARTERLY FINANCIAL
Approval: 06/28/2024
Validity: 07/16/2024

AGREES to issue the following:

TECHNICAL STANDARDS FOR THE PREPARATION OF THE QUARTERLY FINANCIAL REPORT

CHAPTER I
OBJECTIVE, SUBJECTS, AND TERMS

Objective
Art. 1.- These Standards have the objective of establishing the form and content of the quarterly financial report that obligated subjects must submit to the Superintendency of the Financial System and make available to the public.

Subjects
Art. 2.- The subjects obligated to comply with the provisions established in these Standards are:
a) Banks constituted in the country; b) Branches of foreign banks established in the country; c) Savings and credit companies; d) The Mortgage Bank of El Salvador, S.A.; (1) e) The Agricultural Development Bank, insofar as it does not contradict its Creation Law, nor what is provided by the Court of Accounts; and (1) f) Investment banks. (1)

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) Entity: Subjects obligated to comply with these Standards; and c) Superintendency: Superintendency of the Financial System.

CHAPTER II
GENERAL PROVISIONS

Disclosure of the report
Art. 4.- The quarterly financial report must be available to the public in the offices and agencies of the entity in printed form and in electronic format through the internal network available to the public, the entity being able to determine that said report is also available through its corresponding website. Additionally, the entity must comply with what is established in Article 29 of the Technical Standards of Corporate Governance (NRP-17), issued by the Central Bank through its Committee of Standards regarding the quarterly financial report.

Source of information
Art. 5.- The financial statements that will serve as the basis for preparing the quarterly financial report must proceed from the figures of the financial statements presented to the Superintendency; additionally, they must be presented in thousands of United States dollars.

Deadline and Periodicity
Art. 6.- The quarterly financial report will be prepared with reference to the closing of the months of March, June, September, and December of each year and must be sent to the Superintendency and made available to the public in the offices of the entity no later than the month following the end of the reference quarter, except in the case of the report for December 31, which must be presented within the period of the following sixty calendar days.

Persons responsible for the quarterly financial report Art. 7.- The quarterly financial report submitted to the Superintendency must be signed by the members of the board of directors and the general manager or executive director of the entity, with handwritten or electronic signature, with the exception of Investment Banks, which must be signed by the legal representative or special attorney duly authorized for these effects; in the report made available to the public, the names of those who signed it must be listed. (1)

Art. 8.- The use of electronic signature is exempted for the Financial Statements that accompany as an annex to the quarterly financial reports, when the Financial Statements involve the fulfillment of special formalities, such as the physical seal for the exercise of the accounting profession, authorized by the Council for the Surveillance of the Public Accounting and Auditing Profession, respecting said formality by physically signing and sealing such documents.

CHAPTER III
CONTENT OF THE INFORMATION

Art. 9.- The quarterly financial report must contain, when corresponding to the months of March, June, and September, the Balance Sheets and Income Statements corresponding to the closing of said months, with the respective notes, and when corresponding to the closing of the accounting year, the basic financial statements and their notes.

Art. 10.- The quarterly financial report will include the following aspects:
a) The identification of the entity and, if applicable, that of the financial conglomerate to which it belongs, detailing the member companies thereof; b) An analysis of the liquidity situation of the period, including liquidity indicators and compliance with the respective liquidity reserve;

c) An analysis of the regulatory requirements related to capital solvency, that is, the ratio of the equity fund to weighted assets, total liabilities with third parties, including contingent ones, and subscribed social capital; d) An analysis of the quality of risky assets and the corresponding restructuring reserves, including an analysis of their diversification; e) Global information on credits and contracts entered into with persons, natural or legal, related according to the following detail:
i. Related parties must be classified into three groups: related directly with Directors and the Manager, related directly with share ownership, and related indirectly with share ownership;
ii. Reveal for the three aforementioned groups, the amount of transactions, outstanding balances, and the number of debtors;
iii. For the three groups, the terms, classified as short, medium, and long; and
iv. For the three groups, the concentration by risk categories.
f) In the case that applies, the amount of risks assumed, directly or indirectly, with the exclusive-purpose holding company and with other member companies of the financial conglomerate established in the country, and indicate the existing percentage relationship between the amount of said risks in relation to the equity fund and its loan portfolio; g) In the case that applies, the sum of the value of the participation in capital, credits, guarantees, bonds, and guarantees that, in any way, directly or indirectly, the entity grants to its subsidiaries, and indicate the existing percentage relationship between the amount of said risks in relation to the equity fund and its loan portfolio. This requirement will not be applicable to savings and credit companies; h) In the case that applies, the sum of the value of the participation in capital, credits, guarantees, bonds, and guarantees that, in any way, directly or indirectly, the entity grants to companies in which it holds a minority participation, and indicate the existing percentage relationship between the amount of said risks in relation to the equity fund; i) In the case that applies, the sum of the investments made in foreign subsidiaries and the credits, guarantees, bonds, and guarantees granted to member companies of the conglomerate established abroad, and indicate the existing percentage relationship between the amount of said risks in relation to the equity fund and its loan portfolio. This requirement will not be applicable to savings and credit companies; j) Information on contingent operations with national and foreign entities; k) An analysis of the entity's leverage structure; l) An analysis of the maturity and currency mismatches of active and passive operations and compliance with respective regulations; and

m) Reveal the names of the External Auditor, the Fiscal Auditor, and the General Accountant or the person acting in their place.

CHAPTER IV
OTHER PROVISIONS AND VALIDITY

Sanctions
Art. 11.- 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. 12.-
-38), approved by the Board of Directors of the Superintendency of the Financial System in Session No. CD-34/2007 of August 29, 2007, whose Organic Law was repealed by Legislative Decree No. 592 which contains the Law on Supervision and Regulation of the Financial System, published in the Official Journal No. 23, Volume 390, dated February 2, 2011.

Unforeseen Aspects
Art. 13.- Aspects not provided for in the matter of regulation in these Standards will be resolved by the Central Bank through its Committee of Standards.

Validity
Art. 14.- These Standards will enter into force as of the sixteenth of July of two thousand twenty-four.

MODIFICATIONS:
(1) Modifications in the consideration I and in Articles 2 and 7, approved by the Committee of Standards of the Central Reserve Bank of El Salvador, in Session No. CN-08/2025, of September 30, two thousand twenty-five, with validity as of October 15, two thousand twenty-five.