BEIRUT: Central Bank Governor Riad Salameh announced on Tuesday that the majority of the Lebanese banks have managed to raise their capital.
“A big majority of the banks complied with Circular 154,” Salameh told The Daily Star. However, he did not elaborate or say how many banks have actually complied with the circular.
“Once all reports of the Banking Control Commission are ready and communicated, we will issue an official statement,” the governor added.
On Aug. 27, 2020, the Central Bank (BDL) issued Basic Circular 154 detailing the exceptional measures that banks operating in Lebanon have to take.
It requested banks to conduct a proper valuation of their assets and liabilities to be able to meet all capitalization, solvency and liquidity requirements, as well as to resume regular banking operations and business activities.
The circular stipulated that, in order to boost the banks’ liquidity profiles, especially at their foreign corresponding banks, Lebanese banks should encourage customers who transferred abroad the equivalent of $500,000 or more since July 2017, to deposit the equivalent of 15% of the transferred amount in a “special account” with a term maturity of 5 years.
In addition, it asked banks to encourage importers to transfer from abroad the equivalent of 15% of the aggregate amount of letters of credit that they opened in any of the past 4 years, and to place these funds in a “special account,” and block them for 5 years.
Furthermore, the circular asked banks’ chairmen, members of the board of directors, senior executives and major shareholders as well as customers that are identified as “politically exposed persons” and who transferred abroad over $500,000 or its equivalent in other foreign currencies since July 2017, to deposit 30% of such funds and block them for 5 years.
The circular said the amounts deposited into the “special accounts” would be exempt from reserve requirements and from mandatory placements at BDL.
BDL also stressed that after Feb. 28, banks must send all their data to the Banking Control Commission, which in turn checks them and sends the relevant reports to the Central Bank.