Capital Adequacy Regulatory Framework for Banks Operating in Lebanon and Consolidated Financial Statements

Intermediary Circular No. 676

To Banks, Financial Institutions, and Supervisory Delegates

We enclose for your reference Intermediary Decision No. 13567 dated 24/7/2023 concerning the amendment: a copy of Intermediary Decision No.

• Basic Decision No. 6576 dated 24/4/1997 (Consolidated Financial Statements) attached to Basic Circular No. 34
• Basic Decision No. 6939 dated 25/3/1998 (The Regulatory Framework for the Capital Adequacy of Banks Operating in Lebanon) attached to Basic Circular No. 44.

Beirut, on July 24, 2023

Governor of the Central Bank of Lebanon

Riad Toufic Salamé

Intermediary Decision No. 13567

Amending Basic Decisions No. 6576 and No. 6939

The Governor of the Central Bank of Lebanon, pursuant to the Monetary and Credit Law, specifically Articles 70 and 174 thereof, and based on Basic Decision No. 6576 dated 24/4/1997 and its amendments concerning Consolidated Financial Statements, and based on Basic Decision No. 6939 dated 25/3/1998 and its amendments concerning the Regulatory Framework for Capital Adequacy of Banks Operating in Lebanon, and based on the decision of the Central Council of the Central Bank of Lebanon taken in its meeting held on July 5, 2023,

hereby decides as follows:

Article 1 : The text of "Article 5" of Basic Decision No. 6576 dated 24/4/1997 is repealed and replaced with the following text: « In exception to Basic Decision No. 12659 dated 6/9/2017 concerning the application of International Financial Reporting Standards, exchange rate differences resulting from the periodic assessment of the exchange rate center are recorded under the designated item under the Assets section if negative, or Liabilities if positive, in both the financial position of the parent institution (the Bank or Financial Institution) and the consolidated position. If this assessment shows negative differences at year-end, Banks and Financial Institutions must provide for the value of these differences. This provision is recorded under its designated item in the annual balance sheet ».

Article 2: The text of Item (1) of Article 6 bis of Basic Decision No. 6938 dated March 25, 1998 is repealed and replaced with the following text: « 1- No distribution of dividend portions to ordinary shareholders' equity for the financial years 2019 and 2020, 2021, 2022, and 2023. »

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• The application of this Article is suspended pursuant to Intermediary Decision No. 13578 dated September 11, 2023 (Intermediary Circular No. 677).

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Article 3: The provisions of the above Article 1 shall apply for a period of one year from the date of issuance of this Decision and shall be applied from the suspended position dated December 31, 2022.

Article 4: This Decision shall take effect upon its issuance.

Article 5: This Decision shall be published in the Official Gazette.

Beirut, on July 24, 2023

Governor of the Central Bank of Lebanon

Riad Toufic Salamé