BDL published on 9 December 2020 Circular 156 informing banks to pay the 2019 stipulated interest on preferred shares issued by the banks to buyers who were not aware of the nature of the marketed investments, based on the interest rate agreed on as part of the conditions of the issue. Failure to make the payments requires banks to:
1) Allocate provisions equal to three times the missed interest payments on the preferred shares and in the same currency denomination till the banks settle these payments with the shareholders.
2) Establish an interest-free reserve account at BDL equal to three times the missed interest payments on the preferred shares and in the same currency denominations till the banks settle these payments with the shareholders.
Failure to comply by the circular will subject banks to penalties as stipulated in article 208 of the Code of Money and Credit. In addition, the Banking Control Commission will undertake the implementation of the circular.
Lebanese Banks Preferred shares (as end of June 2019)
in USD millions
|Subordinated loans and similar debts||1,521.02|
|Capital – Preferred shares||183.71|
|Issue premium – Preferred shares||3,410.96|