Banks to start capital upgrade from end-2012

We will meet Basel III capital requirements three years before deadline: Salameh

Lebanon’s banks will officially set out to implement the Basel III capital adequacy requirements on the first of January 2013, Central Bank governor Riad Salameh said. “Banks will thus be compliant with Basel III by the end of 2015, three years ahead of the deadline set by the Basel accords,” he said.

The Basel III standards require banks to have a stronger core capital base to reduce risk exposure and absorb any additional losses.

At the end of this year, banks operating in Lebanon are supposed to have a shareholders’ equity of five percent, a tier 1 ratio of eight percent, and a total capital ratio of ten percent. By the end of 2015, banks should have raised these ratios to eight percent for common equity, ten percent for tier 1, and 12 percent for total capital.

Banks operating in Lebanon will likely make a smooth transition to the new capital requirements. Salameh had earlier said that in order to meet the new minimum Tier 1 capital ratio, banks will have to cut dividend distribution.

Reported by Hanadi Chami