Circular No. 222 Current Conditions and Developments

Palestine Monetary Authority
PALESTINE MONETARY AUTHORITY

Circular No. (222 / 2023)
To all banks operating in Palestine
Date: Wednesday, October 25, 2023

Subject: Current Conditions and Developments

With reference to the above subject, and in light of recent events and developments witnessed by the country and their repercussions on citizens and all economic sectors, and to ensure the adoption of measures to limit the impact of these developments on the financial status of banks operating in Palestine and to hedge against these risks and their repercussions, and applying conservative methodologies and mechanisms for calculating expected credit losses on all exposures affected by recent events, particularly facilities granted in the Gaza Strip and facilities for workers in the interior, the following measures are requested:

A. Upgrade customer classification stages where indicators warrant such action.
B. Apply the following as a minimum to the affected exposures mentioned:
1- Assigning a 100% risk weight to the most severe scenarios.
2- Not recognizing real estate or movable collateral, except for land, for the purpose of calculating losses in the Gaza Strip facilities portfolio. 3- Classifying debts within Stage 3 and provisioning necessary expected credit losses at 100% as losses, where indicators show their default and inability to service their debts during the recent events. 4- Allocating 1% of net exposures as additional credit losses and distributing them to accounts most affected by current conditions. 5- Providing us with the impact of the above measures for review, and subsequently recording them in financial statements as of 2023/09/30, with necessary clarifications.

C. Continue monitoring developments regarding the status of the aforementioned exposures and others, continuously evaluating the extent of their risk increase, and provisioning necessary allowances in accordance with the requirements stated in this Circular until other instructions are issued by the Palestine Monetary Authority based on emerging events and developments.

Supervision Group
Palestine Monetary Authority

--- www.pma.ps
Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452 Postal Code: P6160675 | Phone: +970 2 2415251 | Fax: +970 2 2415310 | info@pma.ps

---