Capital Adequacy Regulatory Framework for Banks Operating in Lebanon and Regulatory Capital for Calculating the Prudential Limits on Banks Operating in Lebanon

Central Bank of Lebanon Circular No. 708 for Banks Copy of Interim Decision No. 13666 dated September 20, 2024, regarding the amendment of:

• The Basic Decision No. 6939 dated March 25, 1998 (The Framework for the Capital Adequacy of Banks Operating in Lebanon), attached to Basic Circular No. 44
• The Basic Decision No. 6938 dated March 25, 1998 (The Prudential Limits on Regulatory Capital for Banks Operating in Lebanon), attached to Basic Circular No. 43 Beirut, September 20, 2024 Central Bank of Lebanon On behalf of Dr. Wissam Al-Masri

Interim Decision No. 13666 Amendment of Basic Decision No. 6939 dated March 25, 1998 and Basic Decision No. 6938 dated March 25, 1998

Whereas the Central Bank of Lebanon, pursuant to the Banking and Credit Law, particularly Articles 70, 174, and 175 thereof; Whereas Basic Decision No. 6939 dated March 25, 1998 and its amendments relate to the Framework for the Capital Adequacy of Banks Operating in Lebanon; Whereas Basic Decision No. 6938 dated March 25, 1998 and its amendments relate to the Prudential Limits on Regulatory Capital for Banks Operating in Lebanon; And whereas the Central Council of the Central Bank of Lebanon adopted this decision during its meeting held on September 13, 2024; It is decided as follows:

Article 1: The "Current Wording" of Basic Decision No. 6939 dated March 25, 1998 is hereby repealed and replaced by the following: » Up to 75% of the revaluation reserve is accepted within the basic regulatory capital during the transition period, subject to the prior approval of Article 154 of the Banking and Credit Law, under the following conditions: -1 The Central Council of the Central Bank of Lebanon must verify the bank's revaluation rate and approve it. -2 The revaluation process must be completed no later than December 31, 2025. The assets subject to this Article shall be valued in US Dollars and registered in Lebanese Lira based on the exchange rate announced by the authorized electronic currency exchange market of the Central Bank of Lebanon, as well as upon payment of the applicable tax on the capital gain resulting from this process.«

Article 2: The first sentence of paragraph (8) of Annex No. 1 attached to Basic Decision No. 6939 dated March 25, 1998 is hereby repealed and replaced by the following: » - The gains resulting from the revaluation of real estate assets or any other accepted capital reserve are subject to prior approval by the Central Council, within the limits of the decisions issued pursuant to Article 154 of the Banking and Credit Law.« ../..

Article 3: The first sentence of paragraph (9) of Annex No. 2 attached to Basic Decision No. 6938 dated March 25, 1998 is hereby repealed and replaced by the following: » - The gains resulting from the revaluation of real estate assets or any other accepted capital reserve are subject to prior approval by the Central Council, within the limits of the decisions issued pursuant to Article 154 of the Banking and Credit Law.«

Article 4: This Decision shall take effect immediately.

Article 5: This Decision shall be published in the Official Gazette. Beirut, September 20, 2024 Central Bank of Lebanon On behalf of Dr. Wissam Al-Masri