BDL circulars to meet Basel III requirements

Strong compliance
with international Standards

The Central Bank (BDL) issued yesterday six intermediate circulars, three of which are related to new requirements to be met by local banks.

A source at the BDL said that the issuance of these circulars is taking place to help local banks meet Basel III requirements that will be implemented gradually.

The first intermediate circular concerns the capital adequacy ratio. Modifications cover conditions related to the acceptance of capital tools in the ‘Total Regulatory Capital’, mainly ‘Tier One Capital’ and ‘Tier Two Capital’, as well as Capital Adequacy.

The second intermediate circular is also about the Total Regulatory Capital of banks. Modifications cover the definitions and structure of the regulatory capital, such as shares, cash allowances, legal and regulatory reserves, among others.

The third intermediate circular is related to new BDL rules for subordinated loans and subordinated bonds.

“The main purpose of these three circulars is to maintain a strong financial position of the banks and ensure that the banking system is in high compliance with international banking standards,” the source said. “No new circulars related to Basel III requirements will be issued soon, but some circulars may be published all together at the same time at a later stage,” the source said.

A fourth circular is about financial operations and activities in financial markets. “With the establishment of the Capital Market Authority (CMA), many of the BDL circulars will be handled by this new entity,” the source said. “The BDL issued this particular circular because part of it is related to banks,” the source said.

The fifth circular is about technical skills, university degrees, and professional experience that should be held by some ranking officials in banks. They also include ethical issues.

The BDL has also issued a sixth circular, about the limits of loans that may be offered to the Board members or any related party within a bank.