Central Bank of Libya

P.O. Box 1103 Tripoli / The Great Socialist People's Libyan Arab Jamahiriya

Telegraphic Address: Misr Qlibya - Tripoli

Circular: C.B.L. No. (3/2010 AD) Date: 10 Safar Signatories: 25 Al-Nar 1378 AH (2010 AD)

Reference: C.B.L. / 790

To: The General Manager – Libyan External Bank The General Manager – Libyan External Bank

(In the Name of Allah, the Most Gracious, the Most Merciful)

Subject / Credit Concentration Limits and the Regulations and Standards Governing It

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Based on the provisions of Law No. (1) of the year 1373 AH (2005 AD) concerning Banks.

And with reference to Circular C.B.L. No. (12/2008 AD) issued on 14/07/2008 AD, through which the decision of the Board of Directors of the Central Bank of Libya No. (46) of the year 1376 AH (2008 AD) concerning credit concentration limits and the regulations and standards governing it was circulated.

And based on what the Board of Directors of the Central Bank of Libya concluded, in its sixth meeting of the year 1377 AH (2009 AD) held on 05/11/1377 AH (2009 AD).

We inform you that the Governor of the Central Bank of Libya has issued Decision No. (2) of the year 1378 AH (2010 AD) on 20/01/2010 AD concerning credit concentration limits and the regulations and standards governing it.

And as we refer you to the Governor's Decision No. (2) mentioned above, it is requested to work in accordance with what it contains and place it under implementation, where the decision of the Board of Directors of the Central Bank of Libya No. (46) of the year 1376 AH (2008 AD) concerning credit concentration limits and the regulations and standards governing it, which was previously referred to you via Circular C.B.L. No. (12/2008 AD) issued on 14/07/2008 AD, is considered repealed.

Dr. Muhammad Abdul Jalil Bustina Director of Banking and Currency Supervision Department

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Copy to:

• The Governor
• The Deputy Governor
• The Director of Affairs of the General People's Committee at the General People's Committee apparatus
• The Directors of Specialized Banks (Development - Agricultural - Deposit and Real Estate Investment + Rural)
• The Director of the General People's Committee Department - Central Bank of Libya
• The Director of the Legal Department - Central Bank of Libya
• The Directors of the branches of the Central Bank of Libya (Benghazi - Sabha - Sirte)
• The Secretary of the Board of Directors of the Central Bank of Libya
• Publication with the approval of the Central Bank of Libya on the international information network Microfilm

# Article (8)

In calculating credit concentration ratios, the provisions stipulated in the previous articles are observed, by deducting the value of loans and facilities by the value of guarantees provided to the bank in exchange, as follows:

## 1. Cash Guarantees and Insurance:

The full value of cash guarantees and insurance is deducted according to the following conditions:

(a) The bank must have a binding letter regarding the cash guarantee, signed by the account holder linked to the loans and facilities granted or used.

(b) The cash insurance for indirect facilities must be deposited in a properly linked account and not be withdrawable.

(c) The cash guarantee or cash insurance must be in the same currency as the facilities. If the cash guarantees or insurance are in a different currency than the facilities, 80% of their value is deducted, provided they are in one of the convertible currencies.

(d) The cash guarantee or cash insurance must be held by the lending bank or by banks operating in Libya under the knowledge of the bank granting the facility itself, taking into account the financial solvency of the other bank holding this cash guarantee.

## 2. Gold Bullion:

The value of loans and facilities is reduced by no more than 80% of the market value of gold bullion provided as collateral for these loans and facilities.

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## 3. Securities Issued by States and Governments:

| Deduction Ratio of Guarantee from Debt | Issuing Countries |
|----------------------------------|----------------|
| 100%                             | Libya          |
| 100%                             | Other states and governments (according to the country's credit rating) |
| 100%                             | .1 from AAA to AA- |
| 80%                              | .2 from A+ to A- |
| 50%                              | .3 from BBB+ to BBB- |
| 0%                               | .4 from BB+ to B- |
| 0%                               | .5 Less than B-     |
| 0%                               | .6 Not rated    |

- The deduction ratios mentioned above apply to the market or fair value of the securities. In the absence of a market or fair value for these securities, the deduction ratio applies to the nominal value of the securities.
- If the approved value of the securities provided exceeds the value of the loans or facilities, the deduction ratios are calculated on the value of the facilities or the value of the securities, whichever is lower.
- If the currency of the securities is different from the currency of the facilities, the ratios are reduced by 20%, provided the currency is a convertible currency.

## 4. Securities Issued by Joint Stock and Private Companies:

The debt value is reduced for the purpose of calculating credit concentrations by no more than 60% of the market value of the securities accepted by the bank as collateral for the loan or facility, provided that these securities are registered and tradable in the Libyan stock market, and that the pledge of these securities to the bank is certified by the Depository Center of the stock market.

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## 5. Guarantee Letters and Bank Acceptances Issued by Banks:

| Deduction Ratio of Guarantee from Debt | Banks Issuing Guarantee Letter or Bank Acceptance |
|----------------------------------|------------------------------------------------|
| 80%                              | Banks licensed to operate in the Libyan Arab Jamahiriya     |
| 80%                              | Banks belonging to the Central Bank of Libya and the Libyan External Bank |
| 80%                              | External banks (according to the bank's credit rating) |
| 50%                              | .1 from AAA to AA- |
| 50%                              | .2 from A+ to A- |
| 0%                               | .3 from BBB+ to BBB- |
| 0%                               | .4 from BB+ to B- |
| 0%                               | .5 Less than B-     |
| 0%                               | .6 Not rated    |

- If the value of the guarantee letters or bank acceptances provided exceeds the value of the loans or facilities, the deduction ratios are calculated on the value of the facilities or the value of the guarantee letters or bank acceptances, whichever is lower.
- If the guarantee letters or bank acceptances are provided in a currency different from the currency of the facilities, the ratios are reduced by 20%, provided the currency is a convertible currency.

Central Bank of Libya
P.O. Box 1103 Tripoli / The Great Socialist People's Libyan Arab Jamahiriya
Telegraphic Address: Misr Qlibya - Tripoli

No democracy without
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6. Receivables, assigned to the bank (remittance rights) for executed works: Assigned receivables to the bank are deducted based on the issuing entity and based on the time period elapsed since their issuance date.

Issuing Entity		Time Period Elapsed Since Issuance Date of Receivables
Other public entities (public institutions and companies)	General and local or popular committees	Less than one year
80%	100%	From one year to less than two years
50%	90%	From two years to less than three years
50%	80%	From three years to less than four years
0%	50%	From four years to less than five years
0%	40%	Five years and more
0%	0%

• If the value of the receivables is greater than the value of the secured facilities, the deduction ratios are applied to the value of the receivables or the value of the facilities, whichever is lower.
• If the receivables are in a currency different from the currency of the facilities, the above ratio is reduced by 20%, provided the currency is a convertible currency.

Article (9) The following loans and credit facilities (direct and indirect) are not subject to credit concentration ratios:

• All loans and facilities granted by the bank with the guarantee of the Planning and Finance Authority, and financed from the General State Budget.
• All loans and facilities granted by the bank to projects that have allocations included in the items of the General State Budget.

(7)