In brief

On September 15, 2020, the Office of the Superintendent of Banking Sector Institutions (“SUDEBAN”) issued Resolution No. 041.20, which established temporary measures for evaluating credit portfolios, the creation of provisions in risk categories, the execution of guarantees and special conditions for credits granted before the entry into force of the Decree No. 4.1681 of March 23, 2020 (“Resolution”).2 The Resolution entered into force on September 15, 2020.

The Resolution applies to public and private banking institutions subject to SUDEBAN’s inspection, supervision, vigilance, regulation and control.


1. Purpose.

The Resolution’s purpose is to establish special conditions for the administration of collections of credit portfolio, risk and the gradual constitution of provisions to:

  1. Liquidated credits. Completely or partially liquidated credits, until 13 March 2020.
  2. Commercial or productive credits subject to restructuring. Those credits subject to restructuring, affected by the suspension of commercial activities, and whose debtors have not generated sufficient income from the sale of goods and services. This applies to these credits:
    1. CCVU. Beneficiaries of valid commercial credits, expressed in Commercial Credit Value Units (“CCVU”);
    2. PCVU. Beneficiaries of the Sole National Productive Portfolio, expressed in Productive Credit Value Units (“PCVU”).
    3. Restructuring requests. The beneficiaries of credits expressed in CCVU and PCVU, liquidated completely or partially as of 13 March 2020, affected because of the suspension of commercial activities and that not have generated sufficient income from the sale of goods and services, may request restructuring of payment of capital and interest during the State of Alarm.3 They may request the restructuring through a motivated request and a payment plan according to their financial capacity.

2. Temporary measures.

  1. Risk category. Banking institutions will not change the risk classification of credits granted to persons and entities that, because of the COVID-19 pandemic, have not been paid in the originally established timeframe, even if they present characteristics that require their inclusion in other risk categories.
    1. Risk category granted before the pandemic. Credits granted before 13 March 2020 will maintain their risk classification reflected as of 31 March 2020.
    2. Risk category granted during the pandemic. Credits granted during the State of Alarm will maintain an “A” risk category.
  2. Accounting status. Credits granted at a fixed term to persons or entities that due to the pandemic have not been paid in the originally established term nor have been restructured during the State of Alarm will not be the object of accounting reclassifications
    1. Accounting status granted before the pandemic. Credits granted before 13 March 2020 will maintain their accounting status reflected on March 31, 2020.
    2. Accounting status granted during the pandemic. Credits granted during the State of Alarm will remain valid.
    3. Returns. Banking institutions will book the income from those credits upon collection.
  3. Excess amounts. Banking institutions will maintain excess amounts of provisions registered for the in the original registry accounts, so they cannot reverse or liberate them. The excess amounts will serve as a base to tackle any increase in defaults and minimize the risk of impact of the pandemic.
  4. Suspension of the execution of guarantees. The Resolution suspended the legal possibility to execute guarantees that correspond to the maturity of unpaid credits during the State of Alarm.
  5. Monthly control of temporary measures. Banking institutions will monthly control the credits subject to temporary measures. Restructured credits under the Resolution may still be accounted for in the group of valid credit portfolios, and their respective returns.

3. Accounting registry of restructured credits.

The accounting registry of income related to restructured credits must comply with these instructions:

  1. Receivable interest of valid credits upon restructuring. Banking institutions will continue applying the accrual method during the term of amortization of principal and/or interest. Banking institutions should apply the same method for  interest generated as of restructuring.
  2. Receivable interest of expired credits upon restructuring and default interest. Banking institutions will register them as income once upon collection.

4. Technological updates.

Banking institutions must immediately carry out the t technological updates in their administration systems of credit portfolios for the execution of the Resolution.

5. Non-application of other norms.

The Resolution suspends until December 31, 2020, the rules and guidelines regarding classification of credits, calculation of provisions and their accounting registry that contravene the Resolution. However, the rest of rules issued by SUDEBAN regulating the matter will remain valid.

6. Measures after December 31, 2020.

From January 1, 2021 onwards, banking institutions must carry out the measures  to adequate to the norms issued by SUDEBAN regarding the classification of credits, calculation of provision and their accounting registry.

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