Regulatory Alerts2015-07-16
Instructions for financial leverage
The letter is addressed to the Chairman of the Board and discusses the implementation of international best practices in banking supervision, specifically the Basel Committee's requirements for minimum capital adequacy standards. The Central Bank of Egypt's Board of Directors issued instructions in December 2012 regarding the minimum standard for capital adequacy, and in February 2014, it provided a discussion paper on the leverage ratio to assess the adequacy of the first tier of the capital base compared to the bank's total assets, unweighted by risk. In July 2015, the Board approved instructions on the leverage ratio, requiring banks to maintain a minimum ratio of 3% on a quarterly basis from September 2015 to 2017 as a guideline and from 2018 onwards as a mandatory regulatory requirement. The letter emphasizes the importance of complying with these instructions to strengthen the banking sector's competitiveness and resilience against potential financial crises.