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Byblos Bank increases capital by $135 million.

Summary: Byblos Bank said Wednesday that it has raised its capital by $135 million in compliance the Central Bank's request to raise the private equities of all commercial banks in Lebanon.

BEIRUT: Byblos Bank said Wednesday that it has raised its capital by $135 million in compliance the Central Bank's request to raise the private equities of all commercial banks in Lebanon. "The board of directors of Byblos Bank approved an increase of the Bank's capital in the amount of $135 million, being the equivalent of 10 percent of its Common Equity Tier 1, through the issuance of cash contribution interests. The increase in capital is in implementation of BDL [Banque du Liban] intermediate circular No 13129, dated Nov. 4, 2019," the bank said in a statement.

It added that the cash contribution interests can be converted into common equity each year for the next five years at a conversion ratio of LL1,515.

"The core shareholders of Byblos Bank, including Byblos Invest Holding, which collectively hold around 50 percent of the share capital, have indicated their approval, in principle, to take part in this capital increase, thus demonstrating their commitment to the bank and to Lebanon while hoping that the operating environment in Lebanon would improve through the political authorities taking necessary measures to reduce government expenditures and budget deficit, and implementing needed structural reforms to contain the economic and financial crisis and relaunch the economy," the statement said.

Monday, BLOM Bank said in a statement to Beirut Stock Exchange that it has called for an extraordinary general assembly meeting Tuesday to review and approve the cash contribution to capital instruments in implementation of the terms of BDL intermediate decision number 13120 (related to Intermediate Circular number 532) on the Capital Adequacy Regulatory Framework for banks operating in Lebanon.

The purpose of this meeting was to discuss with shareholders increasing the capital.

A source at the bank declined to say how much BLOM shareholders would raise the capital.

Other bankers approached by The Daily Star did not comment about whether they are willing to increase the capital before the end of 2019 or in 2020.

In principle, banks who fail to comply with the BDL's circular will be forced to allow it to control a stake in the capital of the bank.

But in reality, this scenario is not likely to happen because Central Bank Gov. Riad Salameh prefers to work out some kind of solution to help the lenders increase their capital.

On Nov. 4, Salameh asked Lebanese commercial banks to raise their capital by up to 20 percent of current levels by allowing shareholders to pump in more liquidity.

Salameh said in a new circular that the measures were in anticipation of any possible downgrade by international rating agencies that could reflect negatively on the lenders.

The governor said banks should raise their capital starting from the end of 2019 until the end of 2020.

The aim is to raise the private equity of the banks by $4 billion so this can be added to their cumulative capital of $20 billion.

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Publication:The Daily Star (Beirut, Lebanon)
Geographic Code:7LEBA
Date:Dec 19, 2019
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