Regulatory Alerts2016-08-17
A circular dated January 11, 2016 regarding the concentration of banks’ credit portfolios
The Central Bank of Egypt has reduced the maximum employment limit for individuals and associated parties from 20% to 15% of the bank's total assets (first limit). It also decreased the second maximum employment limit for individuals and associated parties from 25% to 20% of the bank's total assets. The Central Bank of Egypt had previously given banks a three-year grace period to improve their conditions, according to Law No. 88 for 2003. If the cumulative exposure exceeds 50% of authorized guaranteed credit for large borrowers by the bank, then: - Firstly, the risk weight increases on the overriding ratio of the bank's capital with percentages of either: a) Between 200% and 700% when the exposure ratio exceeds 50%. b) 300% when the exposure ratio is at least 700%. For foreign branches, the risk weight increases above half of their bank's total assets. The banks have been granted a one-year grace period to improve their conditions starting from its implementation date, considering that they follow the mentioned decision.