The Lebanese Central Bank issued recently a set of circulars namely intermediate circulars no. 642 & 646 and basic circular no. 164. Intermediate circular 642 is directed to banks, financial institutions & leasing companies concerning the adoption of new benchmark rates on subsidized loans as the Libor is being phased out. In details, the LIBOR rate on USD-denominated subsidized loans for projects in some sectors namely, tourism, agriculture, industry, among others, will be replaced by the SOFR (Secured Overnight Financing Rate) added a spread to be determined by the ISDA (International Swaps and Derivatives Association) organization on top of the pre-existing 7% margin. Similarly, the ESTR (Euro Short Term Rate) Compounded Average Rate added a spread to be determined by the ISDA on top of the 7% previous margin will apply on previously extended Euro-denominated subsidized loans.

On its turn, intermediate circular no. 646 is directed to banks & financial institutions to facilitate the prepayment of certain types of loans (housing loans, educational loans and some types of environmental loans), in the same currency of the loan by exempting banks and financial institutions from obtaining the prior approval of BDL on such prepayments and by also exempting the borrower from any associated prepayment fees.

Finally, basic circular no. 164 requires banks to disclose to the Banking Control Commission on a monthly basis their fresh monthly operating expenses along with the source of funds to honor said payments and how they intend to finance the payments.