Circular No. 7/2022: Establishment of a Unit to Monitor Implementation of Basel Committee on Banking Supervision Regulatory Instructions

Central Bank of Libya P.O. Box 11103 Telegraphic Address: Misurata, Libya - Tripoli, Libya

Reference Number / A.R.N ( )

Subject: Establishment of a Unit to Monitor Implementation of Regulatory Instructions Issued by the Basel Committee on Banking Supervision.

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Greetings...

Based on the provisions of Law No. (1) of 2005 concerning Banks and its amendments, and within the framework of the supervisory and oversight role exercised by the Central Bank of Libya on banks operating in Libya,

And with reference to Circulars No. A.R.N (2004/5), dated 07/06/2004 and 15/03/2005, respectively, regarding the necessity of establishing an Internal Audit Department, a Risk Management Department, and creating an Optimization Unit,

And with reference to Circular A.R.N No. 13/2010 dated 27 September 2010, which was circulated pursuant to the Board of Directors of the Central Bank of Libya Decision No. (20) of 2010,

And within the framework of the Central Bank of Libya's pursuit of applying international best practices, and the Basic Principles of Effective Banking Supervision issued by the Basel Committee on Banking Supervision, particularly the quantitative and qualitative standards for risk management.

Therefore... we inform you of the necessity of the Central Bank of Libya's instructions to establish a Unit to Monitor Implementation of Regulatory Instructions Issued by the Basel Committee on Banking Supervision, which shall be subordinate to the Risk Management Department, within a maximum period of 3 weeks from its date, according to the following allocations:

• Implementation of instructions issued by the Central Bank of Libya regarding regulatory instructions issued by the Basel Committee.
• Disseminating the culture of risk management concept by preparing and providing necessary training courses to transfer expertise in Basel decisions to bank employees and refining the skills of the bank's workforce.
• Working according to a productive mechanism for assessing capital adequacy, taking into account the bank's specific risk structure, and ensuring the implementation of strategies that maintain desired capital levels. This can be achieved through the following: a. Determining the targeted financial solvency of the bank and having it approved by the Board of Directors. b. Completing the capital planning process while considering the level of acceptable risk for the bank. c. Providing clear and documented policies that identify and contribute to reporting on fundamental risks. d. Having an independent periodic review of the bank's self-assessment process for capital adequacy.

Peace be upon you...

Naji Mohammed Issa Director of Banking and Currency Supervision Department

Copy to:

• Mr. / The Governor
• Mr. / Deputy Director of the Banking and Currency Supervision Department
• Mr. / Deputy Director of the Banking and Currency Supervision Department for Office Supervision and Compliance Monitoring Affairs
• Mr. / Deputy Director of the Banking and Currency Supervision Department for Inspection Affairs
• Mr. / Deputy Director of the Banking and Currency Supervision Department for Islamic Banking Affairs
• Messrs. / Directors of Risk Management Departments at Banks

Basel Instructions