BDL Issues a Slew of Circulars on Provisioning, Capital Retrieval, Loan Repayments, and Support to Port of Beirut Victims

The Central Bank of Lebanon (BDL) issued recently four new circulars. Circular 567 issued on 26/8/2020 asks banks to take provisions equal to 45% of their holdings of Lebanese Eurobonds; and to take 1.89% of provisions on their foreign currency deposits with BDL. Banks have up to five years to comply, extended to ten years with Central Council approval. Banks are also asked not to distribute dividends in 2020, and have up to 31/12/2020 to increase their capital by 20%.

Circular 154, issued on 27/8/2020, requires banks to ask their clients who transferred abroad USD in excess of $500,000 since 1/7/2017, to deposit 15% of their transfers in a “special account” for five years so as to shore up foreign liquidity and especially that with correspondent banks. Moreover, the ratio increases to 30% to Board members, large shareholders, and senior management at the banks, in addition to politically exposed persons. Failure to so will subject banks to punitive measures as stated in Law Number 44 of 24/11/2015.

Circular 568, issued on 26/8/2020, asks banks to accept repayments by clients of their USD retail loans in LBP at the rate of 1507.5. Requirements to qualify are: 1) the client should be resident of the country; 2) the client should not have an account in USD; and 3) total housing loans should not exceed $800,000 and total retail loans should not exceed $100,000.

Lastly, circular 569, issued on 26/8/2020, states that victims of Port of Beirut explosion who receive grants or compensation can use these to pay back the exceptional loans acquired through Circular 152 issued by BDL on 6/8/2020. Also, these loans can be paid back in LBP at the rate set by the electronic platform and up to an amount equal to $15,000.

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