Exceptional Exemptions from Banks’ Mandatory Placements

1203 Text/Section /1 R./150 T./2026-6-30 Basic Circular for Banks No. 150

We enclose herewith a copy of Basic Decision No. 13217 dated April 9, 2020, concerning exceptional exemptions from banks' mandatory placements.

Beirut, on April 9, 2020 Governor of Banque du Liban Riad T. Salamé

1 - This title was amended pursuant to Article 1 of Interim Decision No. 13226 dated May 11, 2020 (Interim Circular No. 554).

1204

Basic Decision No. 13217

1 Exceptional Exemptions from Banks' Mandatory Placements

Whereas the Governor of Banque du Liban, based on the Monetary and Credit Law, particularly Articles 70, 76 (paragraph d), and 174 thereof, based on Basic Decision No. 7835 dated June 2, 2001, and its amendments concerning the mandatory reserve, based on Basic Decision No. 7926 dated September 20, 2001, and its amendments concerning banks' mandatory placements, and in order to safeguard the soundness of the banking system and the public interest under the current exceptional circumstances facing the country, particularly regarding contributing to reactivating and stabilizing the national economy, and based on the powers vested in the Governor to ensure the operation of Banque du Liban pursuant to the principle of continuity of public service,

hereby decides as follows:

Article 1: Banks operating in Lebanon are exempted from making mandatory placements at Banque du Liban for funds transferred from abroad and/or funds received in cash in foreign currencies after April 9, 2020 (hereinafter "the Funds"), provided that the conditions specified in Article 2 below are met.

1 - This title was amended pursuant to Article 1 of Interim Decision No. 13226 dated May 11, 2020 (Interim Circular No. 554). 2 - This article was amended pursuant to Article 2 of Interim Decision No. 13226 dated May 11, 2020 (Interim Circular No. 554).

1205 Text/Section /1 R./150 T./2026-6-30 Article 2: In order to benefit from the exemptions referred to in Article 1 above, banks must comply with both of the following conditions:

• 1. The free use of these "Funds" by their owner to avail themselves of all banking services provided by the bank, including transfers abroad, cash withdrawals, and banking card services in Lebanon and abroad, always subject to the general terms of dealing with banks and subordinate laws and regulations.
• 2. The banks must take the necessary accounting measures to track the use of these "Funds" (opening a special account, a sub-account...). Article 3: The exemptions referred to in Article 1 and the conditions imposed in Article 2 shall remain valid even if the owner of "the Funds" requests their conversion, wholly or partially, into any other foreign currency, or requests their transfer from the bank where they were originally received to any other bank operating in Lebanon, such that the latter benefits from the exemptions instead of the transferring bank. In the context of applying this article, the transfer must be executed through the foreign correspondent bank.

Article 3 bis: Each bank must deposit in cash with itself, or with its foreign correspondents in a free account (free of any obligations), or at Banque du Liban in the "Cash Funds" account stipulated in Basic Decision No. 13548 dated April 19, 2023 (Basic Circular No. 165), an amount equivalent to 100% of the value of "Cash Funds" in foreign currencies, as defined in Basic Decision No. 13548 mentioned above, provided that this ratio is established prior to the external liquidity ratio stipulated in Basic Decision No. 13262 dated August 27, 2020 (Basic Circular No. 154). Foreign bank branches are exempt from complying with the aforementioned 100% ratio, provided that the parent bank covers any obligations related to "Cash Funds" for its branch in Lebanon.

1 - This article was amended pursuant to Article 3 of Interim Decision No. 13226 dated May 11, 2020 (Interim Circular No. 554). 2 - This article was added pursuant to Interim Decision No. 13317 dated February 25, 2021 (Interim Circular No. 580), and the latest amendment was introduced pursuant to Interim Decision No. 13818 dated May 8, 2026 (Interim Circular No. 764).

1206 Text/Section /1 R./150 T./2026-6-30 Included in this ratio are:

• The value of the bonds specified in paragraphs (a) and (b) of item (2) under Section "First" of Article 1 of Basic Decision No. 7274 dated April 15, 1999 (Basic Circular No. 62), classified at fair value.
• The value of the portfolio of Lebanese Treasury bonds in foreign currencies (Eurobonds), classified at fair value. Banks may sell Lebanese Treasury bonds in foreign currencies (Eurobonds), provided that the amounts resulting from the sale are used on a priority basis as follows:
• To secure liquidity to meet the requirements of Basic Decision No. 13335 dated June 8, 2021, for one year.
• To finance their commercial and investment operations, without being used to finance their operating expenses. Banks in a non-compliant status with the provisions of this article must retain Lebanese Treasury bonds in foreign currencies (Eurobonds) equivalent to twice the shortfall in the required ratio to cover this deficit, and must not sell or dispose of them throughout the duration of this shortfall. It is noted that funds deposited in "Special Accounts" opened pursuant to Article 2 of Basic Decision No. 13262 dated August 27, 2020, are not subject to this obligation but remain solely governed by the provisions of the aforementioned Basic Decision dated August 27, 2020, under which they were established.

Article 4: Supervisory commissioners must periodically verify banks' compliance with the provisions of this decision and prepare reports containing the results of their audits and observations thereon, provided that Banque du Liban is notified immediately of any non-compliance with these provisions.

Article 5: Each bank that violates the provisions of this decision is subject to administrative penalties stipulated in subordinate laws and regulations, particularly those stipulated in Article 208 of the Monetary and Credit Law, in addition to depositing a special minimum reserve at Banque du Liban that does not accrue interest, equivalent to twice the value of "the Funds" for which it benefited from the exemptions without complying with Articles 2 and 3 of this decision, for a period corresponding to the duration during which it benefited, in violation, from these exemptions, and obligating the concerned bank to pay compensation, as a penalty clause, amounting to 15% of the value of these "Funds".

1207 Text/Section /1 R./150 T./2026-6-30 Article 6: The first calculation of the exemptions referred to in Article 1 above shall commence based on the period extending from Thursday, April 30, 2020, to Wednesday, May 6, 2020.

Article 7: The provisions of this decision shall take effect upon its issuance.

Article 8: This decision shall be published in the Official Gazette.

Beirut, on April 9, 2020 Governor of Banque du Liban Riad T. Salamé