Lebanese banks up regulation to meet "Basel III" terms

Published May 31st, 2012 - 02:00 GMT
The implementation timetable of Basel III capital adequacy requirements in Lebanon would start on 31 December 2012
The implementation timetable of Basel III capital adequacy requirements in Lebanon would start on 31 December 2012

Banque du Liban Governor Riad Salameh said Lebanese banks will comply with Basel III recommendations three years before a 2018 deadline.

Salameh was speaking at a symposium, entitled Risk Strategies for Basel III Compliance and Beyond. He said the implementation timetable of Basel III capital adequacy requirements in Lebanon would start on 31 December 2012 and concludes on 31 December 2015: three years ahead of the Basel recommendations. The event was organised by Moody’s and the Banking Control Commission of Lebanon.

“At the end of this year, banks operating in Lebanon should have formed a five percent common equity ratio, an 8 percent tier 1 ratio, and a 10 percent total capital ratio. By the end of 2015, these ratios should reach a minimum of eight percent, 10 percent and 12 percent, respectively. This directive came after several consultative papers and impact studies performed to ensure its smooth implementation in our banks,” Salameh said. “This regime could not have been possible had it not been for the proactive management on the part of banks operating in Lebanon, and their awareness that the survival kit needed in an open ‘laisser-faire’ economy includes proper credit management and assessment of both domestic and international risk exposures.

“Our banks’ exposures are largely denominated in dollars. Historically, the international marketplace knows we have to make an effort to maintain a high liquidity ratio of high quality. Banks liquidity, accordingly, has to be placed with correspondent banks that engage in facilitating international trade and financial flows, the G-SIFI’s (Global Systemically Important Banks). “However, with the state of international market uncertainty, we do not think they can possibly rely on their own internal resources: they need to see with the professional and watchful eyes of the international rating agencies. We need to build mutual trust between our institutions and these agencies. We are certain that they can support the international community with the wealth of experience they possess, and with lessons that we have all learned from the crisis.”


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