International Monetary FundWorld Bank2017-08-102017-08-102010-11https://hdl.handle.net/10986/27734This assessment of the Basel Core Principles (BCP) was conducted as part of the financial sector assessment program (FSAP) update evaluation of the El Salvador financial system from April 22 to May 10, 2010. The supervisory framework was assessed against the BCP methodology issued in October 2006. The assessment of compliance with each principle is made on a qualitative basis. A four-part assessment system is used: compliant; largely compliant; materially noncompliant; and noncompliant. A largely compliant assessment is given if only minor shortcomings are observed, and these are not seen as sufficient to raise serious doubts about the authority's ability to achieve the objective of that principle. A materially noncompliant assessment is given when the shortcomings are sufficient to raise doubts about the authority's ability to achieve compliance, but substantive progress has been made. A noncompliant assessment is given when no substantive progress toward compliance has been achieved. The ratings assigned during this assessment are not comparable to the ones assigned in the 2000 FSAP, as the bar to measure the effectiveness of a supervisory framework has been raised in the new methodology. This paper is structures as follows: introduction; information and methodology used for assessment; institutional and macroeconomic setting and market structure- overview; preconditions for effective bank supervision; main findings; and recommended action plan and authorities' response.en-USCC BY 3.0 IGOACCOUNTABILITYACCOUNTANTACCOUNTINGACCOUNTING STANDARDSADMINISTRATIVE COSTSARBITRAGEASSET BASEASSET CLASSIFICATIONASSET PORTFOLIOAUDITINGAUTONOMYBANK SUPERVISIONBANKING ASSETSBANKING INDUSTRYBANKING INSTITUTIONBANKING LAWBANKING SECTORBANKING SUPERVISIONBANKING SYSTEMBANKRUPTCYBANKSBONDSCAPACITY BUILDINGCAPACITY CONSTRAINTSCAPITAL ADEQUACYCAPITAL BASECAPITAL FLOWSCAPITAL MARKETSCAPITAL REQUIREMENTCAPITAL REQUIREMENTSCENTRAL BANKCHECKSCOLLATERALCOMMERCIAL BANKSCOMMERCIAL REGISTRYCONFLICT OF INTERESTCONFLICTS OF INTERESTCONFLICTS OF INTERESTSCONSOLIDATED SUPERVISIONCONSUMER PROTECTIONCONVERTIBLE BONDSCOOPERATIVE BANKINGCOOPERATIVE BANKSCORPORATE GOVERNANCECOUNTRY RISKCREDIBILITYCREDIT CARDCREDIT CARDSCREDIT INFORMATIONCREDIT INSTITUTIONCREDIT RISKCREDIT RISK MANAGEMENTCREDIT RISKSCREDITWORTHINESSCUSTODYDEBTDEBTORDEBTORSDEBTSDECENTRALIZATIONDEFAULTSDEMAND FOR CREDITDEPOSITDEPOSIT INSURANCEDEPOSITORSDEPOSITSDERIVATIVESDEVELOPMENT BANKDOMESTIC BANKSDOMESTIC CREDITDUE DILIGENCEECONOMIC GROWTHEQUITY FUNDEXTERNAL AUDITORSFACE VALUEFINANCIAL ASSETSFINANCIAL CONGLOMERATESFINANCIAL CRISESFINANCIAL CRISISFINANCIAL INFORMATIONFINANCIAL INSTITUTIONFINANCIAL INSTITUTIONSFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL SECTORFINANCIAL SERVICESFINANCIAL STABILITYFINANCIAL STATEMENTSFINANCIAL STRENGTHFINANCIAL SYSTEMFOREIGN BANKFOREIGN BANKSFOREIGN CURRENCYFOREIGN LOANSFOREIGN PENETRATIONHOST COUNTRYHUMAN RESOURCEHUMAN RESOURCESILLIQUIDITYINDIVIDUAL ACCOUNTSINDIVIDUAL LOANSINFLATIONINFORMATION TECHNOLOGYINSURANCEINSURANCE COMPANIESINSURANCE POLICYINTANGIBLEINTANGIBLE ASSETINTANGIBLE ASSETSINTEREST RATEINTEREST RATE RISKINTEREST RATE RISKSINTERNAL CONTROLSINTERNATIONAL ACCOUNTING STANDARDSINTERNATIONAL BANKINTERNATIONAL BANKSINTERNATIONAL STANDARDSISSUANCELAWSLEGAL AUTHORITYLEGAL FRAMEWORKLEGAL IMPEDIMENTSLEGAL PROTECTIONLEGAL PROVISIONSLENDERLENDER OF LAST RESORTLENDING BEHAVIORLETTERS OF CREDITLIABILITYLIENSLIQUIDITY RATIOSLIQUIDITY RISKLIQUIDITY RISKSLITIGATIONLOANLOAN LOSS PROVISIONSLOAN PORTFOLIOLOCAL BANKSMACROECONOMIC POLICIESMARKET RISKMARKET RISKSMARKET SHAREMARKET STRUCTUREMINIMUM CAPITAL ADEQUACY RATIOMINISTRIES OF FINANCEMONETARY FUNDMORTGAGEMORTGAGE LOANSMORTGAGESNONPERFORMING LOANSNPLOFF BALANCE SHEETOFF BALANCE SHEET ITEMSOFFSITE MONITORINGOFFSITE SUPERVISIONOPERATIONAL INDEPENDENCEOPERATIONAL RISKOPERATIONAL RISKSOWNERSHIP STRUCTUREOWNERSHIP STRUCTURESPENSIONPENSION FUNDSPOLITICAL UNCERTAINTYPORTFOLIOSPRIMARY CAPITALPRIVATE BANKSPRIVATE CAPITALPRIVATE SECTOR DEVELOPMENTPROFITABILITYPROVISIONING RULESPRUDENTIAL REGULATIONPRUDENTIAL REGULATIONSPRUDENTIAL REQUIREMENTSPRUDENTIAL STANDARDSPRUDENTIAL SUPERVISIONPUBLIC CALLRATING AGENCIESRECAPITALIZATIONREGIONAL BANKSREGULATORY FRAMEWORKREMITTANCESREORGANIZATIONREPAYMENTREPAYMENT CAPACITYREPORESERVERESERVE FUNDRESERVESRETAINED EARNINGSRETURNRETURN ON ASSETSRISK AVERSIONRISK MANAGEMENTRISK MANAGEMENT POLICIESRISK MANAGEMENT STRATEGIESRISK PROFILERISK PROFILESRISK WEIGHTED ASSETSSALES OF ASSETSSAVINGSSECURITIESSEIZURESHAREHOLDERSHAREHOLDERSSOLVENCYSOVEREIGN RISKSTATE BANKSSTOCK EXCHANGESTOCK MARKETSUBORDINATED DEBTSUBSIDIARIESSUBSIDIARYSUPERVISION OF BANKSSUPERVISORY AGENCYSUPERVISORY AUTHORITYSUPERVISORY FRAMEWORKSUPERVISORY POWERSSUPPLEMENTARY CAPITALTRADE FLOWSTRANSFER RISKSTRANSPARENCYUNDERLYING ASSETVALUATIONVALUATIONSWAREHOUSESWARRANTSReportWorld Bank10.1596/27734