PERU Law and Practice Contributed by: Andrés Kuan-Veng and Luis Ernesto Marín, Rubio Leguía Normand
cy, recovery and resolution of banks and other financial institutions is primarily outlined in the Peruvian Banking Law and the Reglamento de los Regímenes Especiales y de la Liquidación de las Empresas del Sistema Financiero y del Sistema de Seguros . Such regulatory framework is designed to maintain stability in the financial system while providing adequate protection to depositors. Pursuant to the Peruvian Banking Law, the SBS has the power to interrupt the operations of a bank in order to prevent it from, or to control and reduce the effects of, a bank failure. Accord - ingly, the SBS may intervene in a bank’s busi - ness by adopting either a temporary surveillance regime (“Surveillance”) or a definitive interven - tion regime (“Intervention”) depending on how critical the situation is deemed to be by the SBS. Either of these actions, depending on the event, must be taken upon the occurrence of certain events, including: • suspension of payments; • repeated failure to comply with instructions from the SBS or the Peruvian Central Bank; • repeated violation of the Peruvian Banking Law or the bank’s by-laws; • unauthorised or unsound management; or • deficit of regulatory capital (to the extent that if it is in excess of 50%, then an Intervention is mandatory). Less drastic measures, such as (i) placing additional requirements, (ii) ordering a capital increase or an asset divesture, or (iii) imposing a financial restructuring plan, may be adopted by the SBS when the situation allows for them. An Intervention may halt a bank’s operations up to 45 days, which may be extended for a second period of up to 45 additional days, during which
time the SBS may institute measures such as (i) cancelling losses by reducing reserves, capital and subordinated debt; and (ii) segregating cer - tain assets and liabilities for transfer to another financial institution. After an Intervention, the SBS will proceed to dissolve and liquidate the bank unless the bank merges with another acquiring institution or another recovery meas - ure is adopted. Beginning on the date on which a resolution of the SBS subjecting a bank to an Interven - tion regime is issued, and continuing until such Intervention is concluded (which period ends when the liquidation process begins), the Peru - vian Banking Law prevents any creditor of the bank from: • initiating any judicial or administrative proce - dure for the collection of any amount owed by the bank; • enforcing any judicial decision rendered against the bank to secure payment of any of its obligations; • constituting a lien or attachment over any of the assets of the bank to secure payment of any of its obligations; or • making any payment, advance or netting payment obligations or assuming any obliga - tion on behalf of the bank, with the funds or assets that may belong to it and are held by third parties, except for: (a) the netting of payment obligations that are made between regulated entities of the Peruvian financial system and insur - ance systems; and (b) under certain circumstances, the netting of payment obligations arising from repur - chase agreements and derivatives trans - actions entered into with local or foreign financial and insurance institutions.
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