Important Decision from 'Banque du Liban'

Issued by Banque du Liban:

In the framework of its legal mandate to take necessary measures to safeguard its assets and protect its rights as stipulated in applicable laws and regulations, and to ensure proper management of funds resulting from facilities previously granted to banks—directly or indirectly—since 2013 to support "startup companies," "business incubators," "accelerators," and "venture capital firms," Banque du Liban issued amendments on 3/9/2026 to the provisions of "Article 8 bis" of the Basic Decree No. 6116 dated 7/3/1996, with the aim of strengthening governance and oversight frameworks for these investments, preserving their value, and ensuring the recovery of funds and rights due to Banque du Liban.

In this context, Banque du Liban clarifies that, over recent years, through the banking sector, financing exceeding USD 300 million has been allocated to these investments. Despite venture capital funding and commercial investment activities not falling within the traditional mandates of any central bank, this practice raises fundamental questions about its consistency with the principles governing Banque du Liban’s operations under the Law on Currency and Credit. These funds were made available to banks, which in turn invested them through various investment mechanisms and structures, both within Lebanon and, in some cases, abroad. A review conducted by Banque du Liban revealed serious shortcomings in the monitoring, management, and supervision of a large number of these investments, whether by the concerned banks, managers appointed by them, or members of investment committees entrusted with overseeing the deployment and preservation of these funds.

Banque du Liban emphasizes that any financing provided from its resources must be subject to the highest standards of accountability, transparency, governance, and financial discipline. The fact that such financing was granted in the past does not in any way diminish the responsibility of beneficiaries to fully disclose how these funds were used, preserve their value, and ultimately fulfill all their obligations toward the central bank.

Therefore, the new circular requires all relevant banks to provide Banque du Liban with comprehensive disclosure regarding investments executed using these funds, including their current status, value, governance, and management practices, as well as to submit concrete and specific exit plans with clear timelines for orderly divestment and repayment of amounts owed to Banque du Liban in U.S. dollars, consistent with the contractual provisions governing such repayments.

The circular also affirms that no bank, investment vehicle, manager, or other related party may carry out any transaction, restructuring, sale, waiver, transfer, arrangement of any right or obligation over assets, or any other material action affecting the value, ownership, recoverability, or integrity of any investment directly or indirectly funded by Banque du Liban, without full compliance with established procedures and obtaining any required approvals pursuant to regulations...

Banque du Liban will address any attempt to dissipate assets, undermine its rights, circumvent these requirements, conceal information, or take any action weakening its ability to recover funds due to it with the utmost seriousness and firmness.

Based on documents, reports, and findings from oversight and monitoring activities received, Banque du Liban will take appropriate civil or criminal legal actions against any bank, company, or individual found to have misused funds derived from loans granted by Banque du Liban, or to have acted contrary to the purposes for which these funds were provided, or to have breached obligations designed to protect these funds and safeguard Banque du Liban’s rights and interests.

Thus, this decision should be viewed as part of a broader policy pursued by Banque du Liban to re-establish principles of accountability and financial discipline in its relationships and interactions with market participants.

Banque du Liban will continue taking necessary measures to protect its assets and recover outstanding amounts. Past practices in no way justify non-compliance with current requirements, and any prior institutional leniency regarding certain shortcomings cannot be interpreted as or considered a concession by Banque du Liban of any of its rights.