The main topic of the commercial bank is lending money out of the deposits

it gets from depositors, and using a part of the proceeds (interest benefit) for its account. The

commercial bank also engages in credit operations and management of funds to the account of

others.

The bank also can:

- Engage in financial intermediation operations.

- Establish or offers help in establishing joint management investment funds.

- Carry out all operations related to or complementary to its topic and within the scope of the

provisions of applicable laws and regulations.

The commercial bank is established through a special license issued by the central

board of the central bank that is composed of the Governor of the central Bank of

Lebanon (Chair), the four Vice-Governors , the Director-General of the Ministry of Finance, and

the Director-General of the Ministry of Economy And trade.

The commercial bank must start its activities in a 1 year period after being established or else it

will be removed from the List of Operating Banks in Lebanon. Moreover, the bank shall deposit

10 billion LBP in the central bank, as a minimum capital, of which the central board would

immobilize a percentage and put it in the Lebanese treasury. The whole amount (10 billion) will

be repaid to the comm. Bank when it declares bankruptcy.

c
The maximum credit facilities, including interest and commission, which the central

bank offers to the commercial bank are around 30% of the latter¶s own money.

The central board of the central bank shall determine the central value that can be offered to the

comm. Bank, within the maximum limit, to facilitate its work under the condition that the comm.

bank follows the laws and regulations of the board.

The required reserves in the Lebanese lira (LBP: Lebanese pound)

The comm. bank must have a required reserve of a ratio relative to the net financial obligations

(net total balances) that are under the required reserve (some balances are exempted from the

required reserve or under discount). The ratios are as the following:

- 25% of the weekly-average of the total balances under demand.

- 15% of the weekly-average of the total balances that are for certain period.

The required reserves in foreign currencies

The comm. Bank shall deposit 15% of the following element that are in foreign currency:

-Total deposits whatever kind they were.

- All the Bonds, certificates of deposit, and banks certificates that it issues.

The comm. Bank in its turn will benefit from the interest that the central bank would pay it on

the foreign currency reserve.

The central bank can also consider the comm. Bank¶s investment in treasury bonds as a part of

the required reserve.

Furthermore, the comm. Bank must have other reserves that shall be deposited in the central

bank. Mainly these reserves are called ³special reserves´.

G
Clearance of checks

Every bank must be a part of the check clearinghouse of the area it exists in. The central bank is

responsible for developing and regulating clearing and settlement operations related to payment

systems and financial instruments. The clearinghouse refuses the checks that are withdrawn from

the comm. Bank¶s account in the central bank.The central bank of Lebanon (BDL) owns and

operates major clearing and settlement systems in the country, and carries out the final settlement

of payment obligations for participants in the banking and financial systems over their central

bank accounts. Midclear, the Custodian and Clearing Center of Financial Instruments for

Lebanon and the Middle East, is Lebanon's clearinghouse.

Other roles of the central banks that concern commercial banks

The BDL controls banks liquidity by adjusting discount rates, by intervening in the open market,

as well as by determining credit facilities to banks and financial institutions. It regulates banks'

credit in terms of volume and types of credit, by imposing credit ceiling, by directing credits

towards specific purposes or sectors and setting the terms and regulations governing credits in

general{

The central bank controls the money transferred from banks outside Lebanon to banks inside it to

prevent money laundry.

The central bank is responsible of setting: financial rules and regulations that concerns banks,

Conditions governing the establishment and operations of a Lebanese Commercial Bank, and

sending intermediary and basic circulars to banks when needed.

citation : www.bdl.gov.lb/pub/pam/Commercial_Banks_2007.pdf