On August 7, 2025, the Legislative Assembly approved the Investment Bank Law, which establishes the framework for incorporating and operating these entities within the Salvadoran financial system to promote economic growth and foster the country’s competitiveness at the international level.
This law regulates financial intermediation and other operations specific to investment banks, encouraging them to provide their clients—known as sophisticated investors—with transparent, reliable, and agile services that contribute to national development.
Investment banks shall be incorporated as corporations with fixed capital and may be established with a minimum of two shareholders. Their services shall be directed exclusively at those who are previously qualified as sophisticated investors, a status that may be held by both individuals and legal entities that meet the criteria established in Article 4 of the Law and in the technical regulations issued by the Central Reserve Bank.
These entities shall be managed by directors, executive directors, managers, representatives, and administrators with extensive knowledge and experience in financial and administrative matters. The Law also sets forth specific requirements and disqualifications applicable to members of the Board of Directors.
In terms of share ownership, natural or legal people, whether domestic or foreign, domiciled or not in the country, may be shareholders of an Investment Bank. However, those who intend to acquire more than 1% of the share capital must obtain prior authorization from the Superintendency of the Financial System.
The process of establishing these entities shall be governed by the provisions of the Banking Law, applicable to the creation of banks without prior public promotion. The minimum share capital shall be US$50 million, an amount that the Board of Directors of the Superintendency shall update every two years.
It should be noted that Investment Banks will not be subject to Article 197 of the Banking Law regarding limits and prohibitions on risk-taking. Likewise, according to Article 24 of the new Law, they must maintain a minimum ratio of 8% between their Equity Fund and the sum of their Weighted Assets, net of depreciation, reserves, and provisions for bad debts.
Concerning financing, Article 37 establishes special rules for secured loans, allowing investment banks to grant any type of financing to sophisticated investors when they secure their loans with legal tender or easily liquidated assets in an amount greater than the amount of such loans. In such cases, the parties may contractually agree on the enforcement process, including automatic enforcement through smart contracts or any other mechanism permitted by technology.
In addition, Investment Banks may operate as Digital Asset Service Providers, Digital Asset Issuers, and Bitcoin Service Providers, provided they obtain prior authorization from the competent authorities.
Finally, the Central Reserve Bank, in its capacity as regulator of the financial system, shall issue, within 60 days of the effective date of the Law, the technical standards applicable to Investment Banks. Pursuant to the second paragraph of Article 67, only technical regulations that expressly cover these entities shall be applicable to them.
The Investment Banks Act shall enter into force thirty days after its publication in the Official Gazette.