Lebanese Banking Control Commision- MH04022020 لجنة الرقابة على المصارف

II.
On-Site Supervision Department
On-site Examination/Review is the earliest established activity of the BCCL and remains the core
instrument of banking supervision in Lebanon.
The BCCL has, at any time, around 10 On-site teams reviewing banks and other financial institutions
under its supervision.
Each team is made up usually of 3 to 7 members headed by a team leader.
The frequency (and comprehensiveness) with which On-site reviews are conducted depend on each
bank’s internal risk-rating. The ratings are not published, and are restricted to the BCCL Board.
The On-site review covers several issues, through a comprehensive process (On – site Examination
Manuel). The issues covered are specified in the “Outline of the On-site Reports”, which is an
internal document for the use of On-site examiners. The review usually covers :
• Loan Portfolio : The sample covered depends on several factors and can go up to 90% of the
loan portfolio of a bank. Each loan reviewed is classified by the examiners.
Reserves/Provisions are set accordingly as and when needed.
• Sovereign Exposure : Banks are required to have a study that sets the ceiling of their
sovereign exposures. These Ceilings would depend on factors, such as the bank’s liquidity
and capitalization. The currency of debt instruments is also taken into consideration
• Banks : Exposure to other banks is analyzed. It is a requirement that exposure to other banks
be set after appropriate study of each bank / correspondent and its financials and ratings.
• Capitalization, Earnings and Liquidity: of each bank is reviewed. The review covers the
accuracy of numbers. More importantly, it covers their adequacy compared to norms set
internationally (e.g. by Basel Committee) and locally (by the BDL & BCCL).
• Management : Management systems are reviewed with close scrutiny. Both the
organization and how well it functions are analyzed. Particular emphasis is given to controls.
Staffing is given special attention as well, especially in terms of adequacy. Risk Management
in banks has become an important part of the focus of the On-Site examination as well as
Corporate Governance ; Banks are expected to comply with Central Bank regulation issued in
July 2006, which is based on Basel guidelines issued in February 2006.
• Market Risks.
• Operational Risks.
• Information Technology: Assessment of the banks’ Systems accuracy and security, the
Business Continuity Plan.
• Anti Momey Laudering (AML): Assessment of the banks’ AML process and implementation.
• Basel II / III Implementation : The On-site teams carry out an assessment of each banks’
Action Plan for the implementation of Basel accords and analyses their Pillar I Capital
Adequacy in addition to their Liquidity and conduct a Supervisory Review and Evaluation
Process (SREP) on the ICAAP exercises of banks.
Mehdi El Husseini-04022020