The Central Bank of Lebanon recently issued Intermediate Circular #446 entitled “Financial Operations and Activities in Financial Markets”. According to the circular, Lebanese banks must register the surplus generated from the swap of sovereign financial instruments in Lebanese Pounds (LBP) with sovereign financial instruments in foreign currencies (FX) under “Deferred Liabilities”. The surplus from these swap operations is to be registered in LBP and to be accounted for under Tier 2 Capital.
The Lebanese commercial banks are required to use this surplus in order to meet:
If any surplus persists after all of the above requirements are met, no more than 70% of this surplus can be registered on the Income Statement as un-distributable profits before being allocated depending on the case as reserves for capital increase under “Common Equity Tier One”.
Tier I and Tier II Capital of Lebanese Banks, in millions of USD
Source: BDL