Central Bank of Libya

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

Telegram Address: Misr Libya - Tripoli

Reference: A.R.M / N 790
Circular: A.R.M No. (2010/4 AD)
Date: 10 Safar
Approval: 25 Ay al-Nar 1378 AH (2010 AD)

To the Brothers / General Managers of Commercial Banks To the Brother / General Manager - Libyan External Bank Badr (Kareem)

Subject / Determination of Bank Financial Center Structures and Their Credit Portfolios

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

With reference to Circular A.R.M No. (2008/11 AD) issued on 14/07/2008 AD, through which the decision of the Board of Directors of the Central Bank of Libya No. (45) of the year 1376 AH (2008 AD) concerning the determination of bank financial center structures and their credit portfolios 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. (3) of the year 1378 AH (2010 AD) on 20/01/2010 AD, concerning the determination of bank financial center structures and their credit portfolios.

And as we refer to you the aforementioned Governor's Decision No. (3), you are requested to work in accordance with its provisions and implement it, and the decision of the Board of Directors of the Central Bank of Libya No. (45) of the year 1376 AH (2008 AD), concerning the determination of bank financial center structures and their credit portfolios, which was previously referred to you in Circular A.R.M No. (2008/11 AD) issued on 14/07/2008 AD, is considered repealed.

Dr. Muhammad Abdul Jalil Abu Sineena
Director of the Banking and Currency Supervision Department

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Copy to all of: -

• The President / The Governor
• The President / The Deputy Governor
• The President / Director of Committee Affairs in the General People's Committee at the Audit Authority apparatus
• The Brothers / General Managers of elected banks (Development - Agricultural - Rent and Real Estate Investment + Profit)
• The President / Director of Audit Department - Central Bank of Libya
• The President / Director of Insurance Department - Central Bank of Libya
• The Brothers / Managers of Central Bank of Libya branches (Benghazi - Sabha - Sirte)
• The President / Secretary of the Board of Directors of the Central Bank of Libya
• Publication on the Central Bank of Libya website on the international information network
  (M.T.D.W.L)

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Central Bank of Libya

P.O. Box 1103 Tripoli – The Great Socialist People's Libyan Arab Jamahiriya Telegram Address: Misr Libya – Tripoli

Decision of the Governor of the Central Bank of Libya

No. (3) of the year 1378 AH (2010 AD)
Concerning the determination of bank financial center structures and their credit portfolios

Governor of the Central Bank of Libya

After reviewing Law No. (1) of the year 1373 AH (2005 AD), concerning Banks.
And the decision of the Board of Directors of the Central Bank of Libya, No. (45) of the year 1376 AH (2008 AD), Concerning the determination of bank financial center structures and their credit portfolios.

And the note submitted by the Banking and Currency Supervision Department, regarding bank financial center structures and their credit portfolios, after consulting banks on the matter.

And what the Board of Directors concluded, in its sixth meeting of the year 1377 AH (2009 AD), held On the date 05/11/1377 AH (2009 AD).

Decided

Article One

Bank financial center structures and their credit portfolios are determined according to the maximum limits shown in the following articles, and the following definitions are adopted within the framework of applying the provisions of this decision:

• Direct Credit Portfolio: Represents direct loans and facilities (cash) whose balances appear within the bank's balance sheet.

• Net Direct Credit Portfolio: Represents the direct credit portfolio after deducting the value of each of:

  • Provisions made for irregular loans and facilities
  • Provisions made for loans and facilities requiring attention
  • Accrued interest recorded on irregular loans and facilities.

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Central Bank of Libya

P.O. Box 1103 Tripoli – The Great Socialist People's Libyan Arab Jamahiriya Telegram Address: Misr Libya – Tripoli

• Current Account Debit Facilities: Represent all facilities granted in the form of current account debit, including overdraft operations.

• Commercial Loans: Represent facilities granted for commercial purposes, to be repaid through fixed installments according to a schedule agreed upon with the client. Commercial loans are divided into two types: Commercial Real Estate Loans and Other Commercial Loans (non-real estate) according to the definitions shown below.

• Commercial Real Estate Loans: Represent those loans granted to finance investments in real estate projects and expected to be repaid primarily from revenues generated from disposing of the real estate investments to be financed (sale or lease). These loans do not include residential lending or commercial loans not granted for real estate purposes but secured by real estate collateral.

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Central Bank of Libya

P.O. Box 1103 Tripoli – The Great Socialist People's Libyan Arab Jamahiriya Telegram Address: Misr Libya – Tripoli

• Other Commercial Loans: This category includes all commercial loans that do not fall under the category of Commercial Real Estate Loans. It also includes the bank's portfolio of discounted bills of exchange.

• Residential Real Estate Loans: This category includes all loans granted to individuals to purchase or build homes for residential purposes, secured by a mortgage on the residential properties themselves.

• Retail Loans: This category includes all loans granted primarily to individuals for non-commercial and non-residential purposes. For example, but not limited to, these loans include the following types: Social advances, credit cards, personal loans, car loans.

Article Two

The bank's financial center structure is determined according to the maximum limits shown below:

(1) The maximum limit for total deposit liability items that a bank can hold shall not exceed thirty times the amount of its core capital.

(2) The net direct credit portfolio of the bank must not exceed 70% (seventy percent) of its total deposit liabilities.

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Central Bank of Libya

P.O. Box 1103 Tripoli – The Great Socialist People's Libyan Arab Jamahiriya Telegram Address: Misr Libya – Tripoli

Article Three

The structure of the bank's direct credit portfolio is determined according to the categories shown below, such that facilities granted in each of the categories comprising this portfolio do not exceed 30% of it.

No.	Credit Category
1	Current Account Debit Facilities
2	Commercial Real Estate Loans
3	Other Commercial Loans
4	Residential Real Estate Loans
5	Retail Loans

Article Four

Indirect facilities (Letters of Credit, Letters of Guarantee, and Agency Credits) granted by banks must not exceed the limits shown below:

No.	Type of Indirect Facilities	Ceiling
1	Open Letters of Credit	Three times the Core Capital
2	Letters of Guarantee and Agency Credits Issued	150% of Core Capital

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Central Bank of Libya

P.O. Box 1103 Tripoli – The Great Socialist People's Libyan Arab Jamahiriya Telegram Address: Misr Libya – Tripoli

Provided that Letters of Credit, Letters of Guarantee, and Agency Credits are reduced by the guarantees provided against them.
According to the types, percentages, and conditions specified in the table below, when calculating exceedances of the maximum percentages.

Type of Guarantee	Conditions for Guarantee Recovery	Deducted Percentage
Cash Collateral	- The collateral must be cash deposited in an account linked to the bank and not withdrawable.<br>- The cash collateral must be effectively financed by the client, i.e., not financed through an account statement.	- If the cash collateral is in the same currency as the indirect facilities: 100%<br>- If the cash collateral is in a different currency than the indirect facilities: 80%
Letters of Guarantee and Agency Credits Issued by Banks Operating in Libya		- In the same currency as the indirect facilities (80%)<br>- In a different currency than the indirect facilities (60%)
Letters of Guarantee and Agency Credits Issued by Banks Subsidiary to the Central Bank of Libya and the Libyan External Bank		- In the same currency as the indirect facilities (80%)<br>- In a different currency than the indirect facilities (60%)

... / To be continued

| Letters of Guarantee and Agency Credits Issued by Foreign Banks | According to the credit rating of the bank issuing the letter of guarantee:<br>- From AAA to AA- : 1<br>- From A+ to A- : 2<br>- From BBB+ to BBB- : 3<br>- From BB+ to B- : 4<br>- From B- to less than : 5<br>- Unclassified : 6 | If the letter of guarantee and agency credit are in the same currency as the indirect facilities:<br>1 (80%)<br>2 (50%)<br>3 (50%)<br>4 No reduction<br>5 No reduction<br>6 No reduction<br><br>If the letter of guarantee and agency credit are in a different currency than the indirect facilities, the above percentage is reduced by 20%, so the percentages in items 1, 2, and 3 become (60%), (30%), and (30%) respectively. |

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Central Bank of Libya

P.O. Box 1103 Tripoli / The Great Socialist People's Libyan Arab Jamahiriya Telegram Address: Misr Libya - Tripoli

Article Five

The following loans and facilities (direct and indirect) are not subject to the limits mentioned in Articles Three and Four above:

• All loans and facilities granted by the bank with the guarantee of the Planning and Finance Authority, and financed from the state general budget.

• All loans and facilities granted by the bank to projects that have allocations listed in the state general budget items.

Article Six

Without prejudice to the penalties and fines stipulated in the Banks Law, if any bank exceeds the limits, ceilings, or percentages specified by the provisions of this circular, it must settle its status and remove the violation within a period of six months from the date of issuance of this circular.

Article Seven

This decision is effective from the date of its issuance, and the Banking and Currency Supervision Department is to take the necessary measures to implement it. The decision of the Board of Directors of the Central Bank of Libya No. 45 of the year 2008 AD concerning the determination of bank financial center structures and their credit portfolios is repealed.

Farhat Omar Bin Qadarah
Governor

Issued in:
Date: 2010-01-20