The Legislative Assembly on Monday approved, in the first debate, a bill that allows foreign banks to open branches in Costa Rica.

The reform to the Ley Orgánica del Sistema Bancario Nacional had the unanimous support of the 43 legislature present during Monday’s session.

Discussion of the second (and final) debate was set to start on July 30.

The proposal is part of the package of legal changes in the process of incorporating Costa Rica into the Organización para la Cooperación y el Desarrollo Económicos (OCDE) – Organization for Economic Cooperation and Development.

The initiative, presented by the government last March, allows the establishment of foreign banks through the legal form of a branch office and the guidelines for its regulation.

Currently, article 141 of the Ley del Sistema Bancario Nacional  (National Banking System) states that private foreign banks must be established in the country through a public limited company (as a subsidiary) to operate as financial intermediaries, but without the support of the parent company.

However, under the proposal, a branch is a legally inseparable entity from its parent company, which is fully responsible for the financial commitments assumed by its branch regardless of its geographic location.

The bill allows private banks to choose the legal form by which they prefer to establish themselves: as a corporation or as a branch.

Costa Rica began its process of joining the OCDE in 2013 and, to date, has been admitted to 13 of 22 technical committees of that organization. When in all the committees, the country may be approved for formal adhesion.