Constitution of Provisions and Net Liquid Shareholders Equity Ratio in Lebanese Pound and International Financial Reporting Standard No. 9 (IFRS 9)

Central Bank Circular No. 600

To Banks and Financial Institutions

We present to you, in reference to Circular No. 13373 dated 3/11/2021, a copy of the Central Decision amending:

• The Fundamental Decision No. 7694 dated 18/10/2000 (Establishment of Provisions and Net Liquid Shareholders Equity Ratio in Lebanese Pound) attached to Fundamental Circular No. 73.
• The Fundamental Decision No. 12713 dated 7/11/2017 (Application of International Financial Reporting Standard No. 9 (IFRS 9)) attached to Fundamental Circular No. 143.

Beirut, on 3 November 2021
Governor of the Central Bank of Lebanon
Riad Salame

Central Decision No. 13373

Amending Fundamental Decision No. 7694 dated 18/10/2000 and Fundamental Decision No. 12713 dated 7/11/2017

The Governor of the Central Bank of Lebanon,
Pursuant to the Monetary and Banking Law, particularly Articles 170, 174, and 182 thereof; And pursuant to Fundamental Decision No. 7694 dated 18/10/2000 and its amendments regarding the establishment of provisions and the net liquid shareholders equity ratio in Lebanese Pound; And pursuant to Fundamental Decision No. 12713 dated 7/11/2017 and its amendments regarding the application of International Financial Reporting Standard No. 9 (IFRS 9); And based on the decision of the Central Bank Council taken in its meeting held on 27/10/2021,

Decrees as follows:

Article One: The text of Paragraph (1) of Article Two of Fundamental Decision No. 7694 dated 18/10/2000 is repealed and replaced with the following text:
« 1. Banks and financial institutions operating in Lebanon shall establish provisions in accordance with the provisions of Fundamental Decision No. 12713 dated 7/11/2017. »

Article Two: The text of Paragraph (2) of Article Two of Fundamental Decision No. 7694 dated 18/10/2000 is repealed.

Article Three: The text of Article Twelve of Fundamental Decision No. 12713 dated 7/11/2017 is repealed and replaced with the following text:
« Banks and financial institutions shall:

1. Record provisions established, and those to be established, on any type of financial assets within the balance sheet and off-balance sheet financial liabilities immediately in the currency of these assets and liabilities.
2. Take appropriate measures to cover debit foreign exchange positions resulting from established provisions (for example, without limitation, by using positive differences in exchange positions resulting from net interest, commissions, and other revenues in foreign currency). »

Article Four: This Decision shall take effect upon its issuance.

Article Five: This Decision shall be published in the Official Gazette.
Beirut, on 3 November 2021
Governor of the Central Bank of Lebanon
Riad Salame