Central Bank of Jordan

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King Abdullah II Award

for Excellence in Government Performance and Transparency Third Session (2007-2010) Silver Award

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Number: 11936/2/10
Date: 14/8/1428 AH
Corresponding to: 11/11/2007 AD

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Legal Liquidity Instructions

No. (2007/27)
Issued by the Central Bank of Jordan pursuant to the provisions of
Article (5/A) of the Central Bank Law
and Articles (2/4/A), (2/4/B) and (99/B) of the Banks Law

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In light of the Central Bank of Jordan's commitment to ensuring that the legal liquidity ratio better reflects the liquidity position of banks, the following is approved:

First: Every bank must always maintain liquid assets amounting to at least (100%) of its total weighted liabilities, provided that its liquid assets in Jordanian Dinars do not fall below (70%) of its weighted liabilities in Jordanian Dinars. It is noted that the legal liquidity ratio is calculated as follows (according to the attached schedule):

(A) Numerator: Consisting of the sum of the following items:

1. Cash in vault.
2. Net balances with the Central Bank.
3. Net balances and deposits with local banks and other financial institutions.
4. Net balances and deposits with foreign banks, head offices, and foreign branches.
5. Government securities (Government of the Hashemite Kingdom of Jordan).
6. Securities guaranteed by the Government of the Hashemite Kingdom of Jordan.
7. Bonds issued by the Jordan Mortgage Refinance Company.
8. Securities maturing in one year or less issued by countries with a credit rating of (AAA) according to Standard & Poor's rating, or equivalent according to Moody's or Fitch, or any other rating agency approved by the Central Bank of Jordan, provided that these securities are in the same currency as the issuing country.

- The following are deducted from the numerator:

1. Certificates of Deposit issued by the Central Bank that have been repurchased.
2. Securities sold with an agreement to repurchase them at a later date (repurchase agreements).
3. Any securities that are pledged or encumbered.

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CENTRAL BANK OF JORDAN

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4. Balances allocated to cover the capital of foreign branches.
5. Balances and deposits pledged with the Central Bank and/or local banks and other financial institutions and/or foreign banks, head offices, and foreign branches.

(B) Denominator: Consisting of the sum of the following items after being weighted by the weights indicated next to each:

1. Total customer deposits: 30%
2. Deposits of banks and other financial institutions maturing in one year or less: 100%
3. Deposits of banks and other financial institutions maturing in more than one year: 30%
4. Deposits of head offices and foreign branches according to the remaining maturity period as follows:
   • Less than one month: 75%
   • From one month to six months: 65%
   • More than six months to one year: 50%
5. Borrowed amounts (including subordinated loans) and debt securities according to the remaining maturity period as follows:
   • Less than one month: 75%
   • From one month to six months: 65%
   • More than six months to one year: 50%
6. Total checks and payment orders: 30%
7. Unused credit facility limits: 30%
8. Issued letters of credit, acceptances, and payment guarantees: 30%
9. Other guarantees and forward contracts: 3%

- From the borrowed amounts referred to in item First/B above, amounts corresponding to liabilities for repurchase agreements for Certificates of Deposit issued by the Central Bank and/or any other securities are deducted, and borrowed amounts from the Jordan Mortgage Refinance Company are also deducted.

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CENTRAL BANK OF JORDAN

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Second: Proceeds from subscriptions in company shares are excluded from the numerator and denominator of the legal liquidity ratio, provided that the proceeds of these subscriptions are shown in a separate item under liabilities in the monthly statement of the bank's assets and liabilities under item (11/2) named "Proceeds of Subscriptions."

Third: For the purposes of applying these instructions, the margin referred to in Article (2/4/B) of the Banks Law is determined at a rate of (3%) annually.

Fourth: This ratio is calculated daily according to the attached schedule, and the Central Bank must be provided with this schedule on a weekly basis on the working day following the end of each week. We emphasize the necessity of providing us with the schedule daily in the event that the total legal liquidity ratio or the ratio in Jordanian Dinars falls below the minimum threshold specified in item (First) above, and for the dates specified by the Central Bank.

Fifth: These instructions come into effect as of 1/1/2008, and the following instructions and circulars are repealed as of that date:

• Legal Liquidity Instructions No. (2007/15) dated 18/12/2007.
• Our Circular No. (13500/2/7/10) dated 28/11/2004.
• Our Circular No. (1088/2/7/10) dated 31/1/2005.
• Our Circular No. (397/2/7/10) dated 16/1/2007.

Please accept our highest regards...

Governor
Dr. Amina Touqan

Attachment: Legal Liquidity Ratio Schedule.
Circular: Legal Liquidity Instructions: HA

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Form (1/1/09)

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LEGAL LIQUIDITY RATIO FOR DEBT DURING THE PERIOD FROM ______ TO
Item	Gross	Net	Gross	Net	Gross	Net	Gross	Net	Gross	Net

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