Lebanon’s central bank to create ‘roadmap’ for banks to meet capital target

Lebanon’s central bank to create ‘roadmap’ for banks to meet capital target

© Reuters. FILE PHOTO: A view shows Lebanon’s Central Bank building in Beirut

BEIRUT (Reuters) – Lebanon’s central bank said on Monday it would create a “roadmap” to underpin its target for the country’s banks to raise capital, after an end-of-February deadline for lenders to meet the requirement passed.

The central bank’s statement made no mention of whether Lebanese banks had fulfilled the directive it set last year for banks to raise their capital defences by 20%.

“It was agreed to put in place a roadmap with deadlines which the central bank will resort to in order to take the appropriate measures related to implementing circular 154,” said the statement, released after a central bank meeting, referring to the order.

Lebanon’s banking sector, heavily exposed to one of the world’s most indebted states, is at the heart of a financial crisis without precedent that erupted in late 2019.

Reuters reporting last month showed a number of banks were struggling to meet the capital target.

Central Bank Governor Salameh had warned that banks that fail to meet the target would have to leave the market. Salameh did not immediately respond to a request for comment on Monday.

The central bank’s circulars had also asked banks to boost their liquidity by 3% with foreign corresponding banks and urged some large depositors to repatriate 15-30% of funds transferred abroad.

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