Lebanon’s central bank asks banks to raise capital by up to 20%: circular

BEIRUT – Lebanon’s central bank has asked banks to raise their capital by up to 20% by the end of June 2020, according to a central bank circular seen by Reuters, amid nationwide protests that led the prime minister to resign last week.

It also asked banks not to distribute dividends for the 2019 financial year.

Banks reopened on Friday after two weeks of closure in the wake of the demonstrations. In the first two days of reopening, lenders did not see any “extraordinary movement” of money, the head of the Association of Banks in Lebanon told Reuters on Saturday.

Lebanon is grappling with its worst economic crisis since the 1975-90 civil war. With growth around zero, a slowdown in capital inflows has led to a scarcity of U.S. dollars and pressure on the pegged Lebanese pound.

Moody’s Investors Service on Tuesday downgraded Lebanon’s rating to Caa2, citing the increased likelihood of a debt rescheduling it would classify as a default, following protests that toppled the government and shook investor confidence.

(Reuters)