Regulatory Alerts2020-11-05 | 13290Capital Adequacy Regulatory Framework for Banks Operating in Lebanon
The Central Bank of Lebanon issued Circular No. 13290 to amend its capital adequacy framework by allowing banks to exceptionally capitalize up to 15% of fixed asset revaluation gains into supplementary own funds. The amendment mandates Central Banking Council verification, requires completing the revaluation and fund increase by December 31, 2021, and specifies that one-third of the profit goes to supplementary own funds while at least half is added in cash to common equity tier 1. This decision takes immediate effect upon issuance and applies cumulatively to existing regulatory requirements.
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:
- 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.
- 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.
- 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