Regulatory Alerts2019-07-01 | 13076Central Bank of Lebanon Circular No. 519: Amendment to Basic Decision No. 12713 Regarding IFRS 9
The Central Bank of Lebanon issued Circular No. 519 to amend Basic Decision No. 12713, which implements International Financial Reporting Standard No. 9 (IFRS 9). The amendment prohibits banks from recognizing immediate profits on exchange or buy-sell operations with the Central Bank during the instrument's maturity period, while allowing immediate profit recognition for specific new operations conducted after January 1, 2019, provided the funds are transferred from abroad or from currency exchange activities. Any surplus generated from these permitted operations must be recorded in the profit and loss statement and transferred to a non-distributable general reserve at the end of the financial year.
Circular No. 519
For Banks and Financial Institutions
We send you Basic Decision No. 13076 dated 1/7/2019 concerning the amendment of Basic Decision No. 12713 dated 7/11/2017 (Implementation of International Financial Reporting Standard No. 9 (IFRS 9)) attached to Circular No. 143.
Beirut, July 1, 2019
Governor of the Central Bank of Lebanon
Riad T. Salamah
Basic Decision No. 13076
Amendment of Basic Decision No. 12713 dated 7/11/2017
The Governor of the Central Bank of Lebanon,
Pursuant to the Monetary and Loan Law, particularly Articles 174, 182, and 70 thereof,
Pursuant to International Financial Reporting Standard No. 9 (IFRS 9),
Pursuant to Basic Decision No. 12713 dated 7/11/2017 concerning the implementation of International Financial Reporting Standard No. 9 (IFRS 9),
Pursuant to the powers vested in the Governor to ensure the continuity of the public service of the Central Bank of Lebanon,
Decides as follows:
Article One: The text of the paragraph "Secondly, Article Five of Basic Decision No. 12713 dated 7/11/2017" is repealed and replaced with the following text:
"Banks and financial institutions shall not recognize profits resulting from exchange operations or buy-sell operations of financial instruments conducted with the Central Bank of Lebanon during the maturity period of the instruments being exchanged, nor shall they recognize immediate profits thereon.
Banks and financial institutions may recognize immediate profits on existing operations or financial structures they may undertake with the Central Bank of Lebanon, provided that:
- These operations are executed after 1/1/2019.
- The source of funds employed in these operations consists of funds transferred for this purpose from outside their existing funds held at the Central Bank of Lebanon, or from those resulting from currency exchange operations.
- The surplus resulting from these operations is recorded in the profit and loss statement, and shall be transferred at the end of the financial year to a non-distributable general reserve.
The Banking Control Commission shall monitor the proper implementation of the provisions of this paragraph."
Article Two: This Decision shall take effect immediately upon its issuance.
Article Three: This Decision shall be published in the Official Gazette.
Beirut, July 1, 2019 Governor of the Central Bank of Lebanon
Riad T. Salamah