CNBCR-10/2024	NRP-85 TECHNICAL STANDARDS TO AUTHORIZE OPERATIONS WITH RELATED ENTITIES	CENTRAL RESERVE BANK OF EL SALVADOR GOVERNMENT OF EL SALVADOR
Approval: 10/31/2024
Validity: 11/15/2024

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

CONSIDERING:

I. That Article 203 of the Banking Law establishes that banks, as well as their subsidiaries, may not have in their portfolio loans, guarantees, and sureties granted to natural or legal persons directly related to the administration or in a direct or indirect manner to the ownership of the respective institution, nor acquire securities issued by them in a global amount that exceeds five percent of the paid-in social capital and capital reserves of said institution.

II. That Article 209, subsection i) of the Banking Law establishes that the Superintendence of the Financial System may authorize certain operations with banks or financial institutions constituted abroad whose ownership or administration, directly or through third parties, is linked to their shareholders or to the corporate group to which the bank belongs, provided that those institutions are duly supervised by the authorities of the country where they are incorporated.

III. That Articles 155 and 161 of the Law of Cooperative Banks and Savings and Credit Societies establish that Savings and Credit Societies shall be subject to the provisions of the Banking Law insofar as pertinent.

IV. That Article 3, subsection c) of the Law of Supervision and Regulation of the Financial System establishes that it is the responsibility of the Superintendence of the Financial System to proactively monitor the risks of the members of the financial system and the manner in which they manage them, ensuring the prudent maintenance of their solvency and liquidity.

V. That Article 7, subsection b) of the Law of Supervision and Regulation of the Financial System establishes that it corresponds to the Superintendence of the Financial System the supervision of banks constituted in El Salvador.

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:

Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv

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CNBCR-10/2024	NRP-85 TECHNICAL STANDARDS TO AUTHORIZE OPERATIONS WITH RELATED ENTITIES	CENTRAL RESERVE BANK OF EL SALVADOR GOVERNMENT OF EL SALVADOR
Approval: 10/31/2024
Validity: 11/15/2024

TECHNICAL STANDARDS TO AUTHORIZE OPERATIONS WITH RELATED ENTITIES

CHAPTER I

OBJECT, SUBJECTS, AND TERMS

Object

Art. 1.- These Standards aim to determine the operations that obligated subjects may carry out with foreign entities when, being these banks or financial institutions constituted abroad, their ownership or administration is linked, directly or through third parties, to the shareholders or to the corporate group to which the obligated subjects belong.

Subjects

Art. 2.- The subjects obligated to comply with the provisions established in these Standards are:
a) Banks constituted in El Salvador; and b) Savings and credit societies;

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/entities: Subjects obligated to comply with these Standards; c) Foreign entities: Foreign banks or financial institutions referred to in Article 209, subsection i) of the Banking Law; and d) Superintendence: Superintendence of the Financial System.

CHAPTER II

GENERAL PROVISIONS

Supervision of the country of origin

Art. 4.- The foreign entities with which the entity will carry out the operations authorized to it must be duly supervised by the authorities of the country where they are domiciled and incorporated.

It will be understood that foreign entities are duly supervised when they have similar or superior regulatory and supervision requirements with respect to those of El Salvador.

Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv

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CNBCR-10/2024	NRP-85 TECHNICAL STANDARDS TO AUTHORIZE OPERATIONS WITH RELATED ENTITIES	CENTRAL RESERVE BANK OF EL SALVADOR GOVERNMENT OF EL SALVADOR
Approval: 10/31/2024
Validity: 11/15/2024

Authorized operations

Art. 5.- The Superintendence may previously authorize an entity to contract with a foreign entity, linked to its ownership or by administration in accordance with what is established in Article 1 of these Standards, the following operations:
a) The alienation of its portfolio of non-performing loans, the litigious rights of the loans, and extraordinary assets; b) The purchase of loan portfolios, prior evaluation of said portfolio, in accordance with the "Standards for Classifying Credit Risk Assets and Establishing Sanitation Reserves" (NCB-022), must comply with the risk assumption limits established in Articles 197 and 203 of the Banking Law; and c) The celebration of Contracts for Administration and Collection of Portfolios, for which the entity must previously present to the Superintendence the following:
i. Object of the contract;
ii. Inventory of the credit portfolio subject to administration, detailing the name, amount, balance, date of granting, maturity date, delinquency, overdue portfolio, guarantees, and others;
iii. Define the form of collection, whether administrative and/or judicial; and
iv. Copy of the draft contract.

Likewise, the Superintendence may authorize other specific operations with the foreign entities referred to in this article, provided that those institutions are duly supervised by the authorities of the country where they are incorporated, in accordance with what is established in the second paragraph of Article 4 of these standards.

Accounting treatment

Art. 6.- The accounting treatment for the removal of an asset due to sale, whether in cash or with financing, shall be carried out in accordance with the Accounting Manual for Deposit-Collecting Institutions and Holding Company (NCF-01).

CHAPTER III

OTHER PROVISIONS AND VALIDITY

Sanctions

Art. 7.- Non-compliance with the provisions contained in these Standards shall be sanctioned in accordance with what is established in the Law of Supervision and Regulation of the Financial System.

Repeal

Art. 8.- These Standards repeal the "Standard to Authorize Operations with Related Entities" (NPB4-29), approved by the Board of Directors of the

Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv

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CNBCR-10/2024	NRP-85 TECHNICAL STANDARDS TO AUTHORIZE OPERATIONS WITH RELATED ENTITIES	CENTRAL RESERVE BANK OF EL SALVADOR GOVERNMENT OF EL SALVADOR
Approval: 10/31/2024
Validity: 11/15/2024

Superintendence of the Financial System in Session No. CD-67/2000 of December 21, 2000, whose Organic Law was repealed by Legislative Decree No. 592 which contains the Law of Supervision and Regulation of the Financial System, published in the Official Journal No. 23, Volume No. 390, of February 2, 2011.

Unforeseen aspects

Art. 9.- Aspects not provided for in regulatory matters in these Standards shall be resolved by the Central Bank through its Committee of Standards.

Validity

Art. 10.- These Standards will enter into force as of November 15, two thousand twenty-four.

Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv