On November 21st, 2024, the Central Bank issued intermediate circulars 715/13677 and 716/13678 to modify basic circulars 150/13217 and 154/13262 respectively.
Intermediate circular 715 modified basic circular 150/13217 concerning the exceptional exemption for banks mandatory placements at the Central Bank. The circular states that banks must deposit in cash either at the bank, Central Bank or at correspondent banks, free from any obligations, an amount equivalent to 100% of the funds received in foreign currency banknotes “cash” and/or transferred from abroad after April 9th, 2020. The amount deposited must be established before calculating the external liquidity ratio as per basic circular 154 dated August 27th, 2020.
The circular allowed banks to include in the 100% ratio the sovereign bonds issued by the G-10 countries and bonds rated “BBB” and above, issued by parties having an equivalent rating. Moreover, Lebanese Eurobonds portfolio must not be included in calculating the above ratio and banks are prohibited from selling Eurobonds in case they violate the provisions of the circular.
Intermediate circular 716 adjusted basic circular 154/13262 regarding the exceptional measures to reactivate the work of banks operating in Lebanon. Basic circular 154 issued by the Central Bank on August 27th, 2020, in its third article, required banks to deposit at correspondent banks an amount equivalent to 3% of total deposits in foreign currency at the bank as at July 31st, 2024; and banks that do not fulfill this condition have till end of 2025 to meet the required ratio. Moreover, the market value of banks’ portfolios of Lebanese Eurobonds that are categorized at Fair Value through Other Comprehensive Income (FVOCI) and at Fair Value through Profit or Loss (FVTPL) could be incorporated in the 3% external liquidity ratio.
The new intermediate circular (716) allowed banks to include in the external liquidity ratio (3%) the fair value of its portfolios of sovereign bonds issued by the G-10 countries and bonds rated “BBB” and above, issued by parties having an equivalent rating.
It is to be noted that both new intermediate circulars are effective upon publication.
Disclaimer :
This article is a research document that is owned and published by Blominvest Bank SAL.
No material from this publication may be modified, copied, reproduced, repackaged, republished, circulated, transmitted or redistributed directly or indirectly, in whole or in any part, without the prior written authorization of Blominvest Bank SAL.
The information and opinions contained in this document have been compiled from or arrived at in good faith from sources deemed reliable. Neither Blominvest Bank SAL, nor any of its subsidiaries or affiliates or parent company will make any representation or warranty to the accuracy or completeness of the information contained herein.
Neither the information nor any opinion expressed in this research article constitutes an offer or a recommendation to buy or sell any assets or securities, or to provide investment advice.
This research article is prepared for general circulation and is circulated for general information only.