Capital Adequacy Regulatory Framework for Banks Operating in Lebanon

Circular No. 575
For Banks

We address you regarding Circular No. 13290 dated 5/11/2020 concerning the amendment of Central Decision No. 6939 dated 25/3/1998 (Regulatory Framework for the Capital Adequacy of Banks Operating in Lebanon) attached to Circular No. 44.

Beirut, 5 November 2020
Governor of the Central Bank of Lebanon
Riad T. Safieh

Central Bank Circular No. 13290
Amending Central Decision No. 6939 dated 25/3/1998

Whereas the Governor of the Central Bank of Lebanon, Pursuant to the Monetary and Exchange Law, particularly Articles 174 and 175 thereof, And pursuant to Central Decision No. 6939 dated 25/3/1998 and its amendments regarding the Regulatory Framework for the Capital Adequacy of Banks Operating in Lebanon, And pursuant to the decision taken by the Central Banking Council at its meeting held on 28/10/2020,

Has decided as follows:

Article One: The following "Repeated Article Eight" is added to Central Decision No. 6939 dated 25/3/1998:
Text:
"Repeated Article Eight: Exceptionally, 15% of the net profit resulting from the revaluation of fixed assets owned, in accordance with Article 154 of the Monetary and Exchange Law, may be accepted within supplementary own funds, subject to the following cumulative conditions:

1. The Central Banking Council of the Central Bank of Lebanon verifies, at the expense of the concerned bank, the validity of the revaluation process and approves it.
2. In this case, own funds shall be increased within a maximum period of 31/12/2021 in an integrated and simultaneous manner as follows:
   a. Adding one-third of the revaluation profit, at most, to supplementary own funds. b. Increasing own funds from the common equity tier 1 category in cash by an amount equivalent to at least half of the value of the revaluation profit referred to in paragraph (a) of item 2.
3. The revaluation and own funds increase process shall be completed within a maximum period of 31/12/2021."

Article Two: This decision shall take effect upon its issuance.
Article Three: This decision shall be published in the Official Gazette.

Beirut, 5 November 2020
Governor of the Central Bank of Lebanon
Riad T. Safieh