Investments in Securities Assigned to Customers to be recorded as liabilities

Venezuelan banking institutions have traditionally followed the practice of acquiring rights and participations in securities and assigning these to their customers, therefore avoiding having to register these investments in their accounting records as liabilities.  By this resolution, the Superintendency of Banks has ordered that this practice cease aiming for more transparency in the balance sheets of banks.  The banks are allowed to display these liabilities in up to 20 quarters in their accounting records, at the rate of not less than 1/20^th of the total amount each quarter.  However, this measure will have implications for the equity ratios of banks.

Modification of Bank Accounting Requirements

Resolution No. 234-06 of the Superintendency of Banks

Official Gazette No. 38.432,  May 9, 2006

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New criteria for determining bank solvency

The Superintendency of Banks has created the Index of Equity Solvency (Indice de Solvencia Patrimonial) that will be used to determine, on a constant basis, the solvency of banks.  Based on the formula (accounting equity plus operating results—both of which are defined terms in the pertaining regulations—divided by total assets) provided by this resolution, banks must maintain an Index of Equity Solvency of at least 8%, although the Superintendency of Banks may vary such index from time to time.  Venezuelan banks with foreign branches must measure their index on the basis of their consolidated results.  The banks must inform the Superintendency of their respective indexes within 15 days before closing each calendar month.  Said reports must be approved by the board of directors of the bank, and they must be signed by the chairman, vice chairman, internal comptroller and the general auditor of each bank, expressly indicating that the report includes all of the assets of the bank.

Creation of Index of Equity Solvency

Resolution No. 233-06 of the Superintendency of Banks

Official Gazette No. 38.439 of May 18, 2006