Lebanon Committed To Implementing Basel III Rules-Central Banker

Sunday, Jul 24, 2011

(This item was originally published on Friday)

BEIRUT (Zawya Dow Jones)--Lebanon's top banker said Friday the country's central bank remains committed to implementing Basel III regulations and would continue to be conservative in its approach to regulating the domestic banking sector.

"We at the central bank are committed to implement Basel III regulations," Riad Salameh, Lebanon's central bank governor said at a Credit Suisse event in Beirut.

The country's banking system was updated nearly three years ago with a batch of regulations that are similar to those being discussed at Basel, added Salameh.

Under the guidance of the central bank and the Association of Banks in Lebanon, Lebanese banks started to gradually implement Basel III recommendations to reduce risk management from 2010. In 2009, Lebanon's central bank asked all commercial banks in Lebanon to tighten supervision and reduce risk management.

Basel III regulations include tighter definitions of common equity. It also introduced liquidity coverage ratio changes but that won't be fully implemented until 2015.

The liquidity coverage ratio for banks restricts the types of financial instruments banks can include as capital against possible future losses and under which banks must hold 4.5% by 2015, then a further 2.5%, totaling 7%. It also includes measures to limit counterparty credit risk.

Lebanese banks have mostly met the capital adequacy ratios set by international organizations, according to the central bank.

Salameh said Lebanon abides by standards adopted by the international community. "We are committed to globalization following the 2008-09 financial crisis which is not over," he said.

Basel III was originally upgraded following the recent financial crisis.

However, Lebanese banks weathered the storm and recorded growth during the crisis years due to measures adopted by the central bank, including a prohibition on commercial banks from dealing with U.S.-related mortgage bonds.

"Lebanon will always be conventional in dealing with financial securities and derivatives and will maintain the separation between commercial and investment banks," he said.

-By Mirna Sleiman; Dow Jones Newswires; +97 1 4446 1698; mirna.sleiman@dowjones.com;

(Leila Hatoum in Dubai contributed to this article.)

(END) Dow Jones Newswires

24-07-11 0354GMT