Text/Section 1 R./72 T. /2005-6-30 391

Basic Circular for Banks No. 72

We enclose herewith a copy of Basic Decision No. 7693 dated 18/10/2000 concerning the ratio of net liquid assets in foreign currencies.

Beirut, on 18 October 2000 Governor of the Central Bank of Lebanon Riad T. Salamé Central Bank of Lebanon Official No. 1856

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Basic Decision No. 7693 Ratio of Net Liquid Assets in Foreign Currencies The Governor of the Central Bank of Lebanon, pursuant to the Monetary and Discount Law, particularly Articles 79, 174, and 177 thereof, and pursuant to the decision of the Central Council adopted in its meeting held on 18/10/2000,

hereby decides as follows: ∗ Article 1: 1.

• All banks operating in Lebanon must maintain a ratio of 10% of the following foreign currency components as net liquid assets in these currencies:
• All types of deposits received, regardless of their nature.
• Debt securities, certificates of deposit, and bank certificates issued by them, as well as loans obtained from the financial sector with a remaining maturity of one year or less.

∗∗ Article 2: For the purpose of calculating the two ratios stipulated in Article 1 of this Decision:

• 1. Treasury securities referred to in paragraph (2) of Article 1 above are valued monthly based on their market value, noting that this valuation method is not mandatory for other treasury securities forming part of the bank's financial investment portfolio.

∗ Last amendment to this paragraph was made pursuant to Interim Decision No. 8068 dated 28/2/2002 (Interim Circular No. 16). ∗∗ This paragraph's text was repealed pursuant to Interim Decision No. 8068 dated 28/2/2002 (Interim Circular No. 16).

393 2∗

• The following are considered cash assets∗∗ :
• Cash liquidity in bank vaults.
• Funds deposited with the Central Bank of Lebanon.
• Funds deposited with other banks with a remaining maturity of one year or less.

Article 3: Foreign bank branches operating in Lebanon may be exempt from the ratio of net liquid assets in foreign currencies specified in paragraph (1) of Article 1 of this Decision, subject to prior written, absolute, unconditional, and irrevocable approval from the parent bank for any resulting shortfall, and, if necessary, immediate coverage of such shortfall upon the first request by the Central Bank of Lebanon.

Article 4:

Article 5: The Banking Supervision Committee shall issue an implementing circular for the provisions of this Decision.

Article 6: Subject to the provisions of Article 4 of this Decision, each bank must deposit a special minimum reserve with the Central Bank of Lebanon in an interest-free dedicated account, equivalent to the value of the shortfall in the ratio referred to in paragraph (1) of Article 1 of this Decision, for the duration of the months during which the latest preceding status statement shows a decline in this ratio.

Article 7: The Central Bank of Lebanon shall collect from banks that do not comply with the deposit of the special minimum reserve pursuant to Article 7 of this Decision, a penalty interest calculated in accordance with the provisions of Article 77 of the Monetary and Discount Law and the regulatory texts issued by the Central Bank of Lebanon on this matter.

∗ This paragraph was amended pursuant to Decision No. 7856 dated 30/6/2001 (Circular 1924 - old numbering-). See Article 2 of Basic Decision No. 7926 dated 20/9/2001 (Basic Circular No. 86) amended by Interim Decision ∗∗ No. 8312 dated 16/12/2002 (Interim Circular No. 26) which is effective for two years from its issuance date; and paragraph (4) of which states as follows: "Treasury securities subscribed under the provisions of paragraph (1) of this Article are included among bank liquid assets and are eligible for sale and repurchase operations under the trust agreement (REPO) system at the Central Bank of Lebanon without any commission or interest."

This article was repealed pursuant to Interim Decision No. 8068 dated 28/2/2002 (Interim Circular No. 16).

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∗ Article 8: Decision No. 7254 dated 18 March 1999, attached to Circular for Banks No. 1709 dated 18 March 1999, and Decision No. 7425 dated 18/10/1999, attached to Circular for Banks No. 1764 dated 18 October 1999, are hereby repealed.

Article 9: This Decision shall take effect upon its issuance.

Article 10: This Decision shall be published in the Official Gazette. Beirut, on 18 October 2000 Governor of the Central Bank of Lebanon Riad T. Salamé

∗ Circular numbers are according to the old numbering system.