Internship Report

Central Bank of Lebanon

ESA Branch

Prepared by: KARAM Karam

(201611135)

Under the supervision of:

Dr. MAKHOUL Sarah

Internship Period:

From 5 July to 29 July 2021

Academic year
2021-2022
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Acknowledgments
My first thanks go to Dr. Makhoul Sarah, my internship supervisor for her management, guidance, and
understanding. This internship is important and prepares us for the professional field and which has an
important role in our success in university and its advice has helped us to know the basis of our
success.

Then I thank the management of the "Bank of Lebanon-ESA" in general which gave me the
opportunity to finish my internship in this branch.

I would like to thank all the employees who came from the Bank's headquarters in Beirut to inform us
about the different departments of the bank, as well as the employees who sacrificed their time.

Finally, I would like to thank my parents who have support me to be effective in this internship and
who have always encouraged me in the pursuit of my studies, as well as for their help and
understanding.

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 Table of contents
ESA Branch...............................................................................................................................................0
Introduction................................................................................................................................................5
Chapter 1: Lebanese banking sector and BDL.........................................................................................6
1. Lebanese banking sector.................................................................................................................6
2. Bank of Lebanon.............................................................................................................................7
3. Organizational chart........................................................................................................................8
Chapter 2: Missions of BDL’s department................................................................................................9
A. Departments................................................................................................................................9
1. Banking Supervision Commission..............................................................................................9
2. Special Investigation Commission..............................................................................................9
3. Financial Operations Directorate..............................................................................................10
4. Human Resources Directorate...................................................................................................11
5. Department of preparation and Training...................................................................................11
6. Cash Operations Directorate.....................................................................................................12
7. Finance Unit..............................................................................................................................13
8. Accounting Directorate.............................................................................................................14
9. Foreign Affairs Manager...........................................................................................................14
10. Islamic banks.........................................................................................................................15
11. Branch Directorate.................................................................................................................15
12. Legal affairs...........................................................................................................................16
13. Compliance unit.....................................................................................................................17
14. Financial markets...................................................................................................................18
15. Department of Banking.........................................................................................................19
16. Directorate of real estate and financial assets........................................................................20
17. Directorate of real estate and financial assets........................................................................23
18. Banking Directorate...............................................................................................................24
19. Directorate of Statistics and Economic Research..................................................................25
20. Informatics Directorate..........................................................................................................25
21. Payment systems....................................................................................................................26
B. Conferences...................................................................................................................................27
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 1. Kafalat.......................................................................................................................................27
a. Servicing borrowers......................................................................................................................27
b. Servicing of lending institutions (banks operating in Lebanon)...................................................27
c. Serving the Lebanese economy....................................................................................................27
2. Midclear....................................................................................................................................27
Chapter 3: Findings and recommendations..............................................................................................29
1. Results...........................................................................................................................................29
2. Constraints....................................................................................................................................31
3. Contributions and skills................................................................................................................31
4. Recommendations.........................................................................................................................31
Conclusion...............................................................................................................................................32
References................................................................................................................................................34
Introduction................................................................................................................................................5
Chapter 1: Lebanese banking sector and BDL.........................................................................................6
1. Lebanese banking sector.................................................................................................................6
2. Bank of Lebanon.............................................................................................................................7
3. Organizational chart........................................................................................................................8
Chapter 2: Missions of BDL’s department................................................................................................8
A. Departments....................................................................................................................................8
1. Banking Supervision Commission:.............................................................................................8
2. Special Investigation Commission:.............................................................................................9
3. Financial Operations Directorate:.............................................................................................10
4. Human Resources Directorate:..................................................................................................10
5. Department of preparation and Training:..................................................................................11
6. Cash Operations Directorate:....................................................................................................12
7. Finance Unit:.............................................................................................................................12
8. Accounting Directorate:............................................................................................................13
9. Foreign Affairs Manager:..........................................................................................................14
10. Islamic banks:........................................................................................................................15
11. Branch Directorate.................................................................................................................15
12. Legal affairs...........................................................................................................................16
13. Compliance unit:....................................................................................................................17
14. Financial markets...................................................................................................................18
15. Department of Banking.........................................................................................................19
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 16. Directorate of real estate and financial assets........................................................................20
17. Directorate of real estate and financial assets........................................................................23
18. Banking Directorate...............................................................................................................24
19. Directorate of Statistics and Economic Research..................................................................25
20. Informatics Directorate..........................................................................................................25
21. Payment systems....................................................................................................................25
B. Conferences......................................................................................................................................26
1. Kafalat.......................................................................................................................................26
2. Midclear....................................................................................................................................27
Chapter 3: Findings and recommendations..............................................................................................28
1. Results...........................................................................................................................................28
2. Constraints....................................................................................................................................30
3. Contributions and skills................................................................................................................30
4. Recommendations.........................................................................................................................31
Conclusion...............................................................................................................................................31
References:...............................................................................................................................................32

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 Introduction
At the end of the second year in management, an internship is necessary for the students to discover the
world of work and to deepen in the various banking operations which will help us to obtain a good
experience.

I had the chance to do an internship at the Central bank of Lebanon- ESA branch because it will present
an opportunity to go into the field and see how more prepared my knowledge already acquired
theoretically, this is reflected in practice and also to learn the different operations of the Bank of
Lebanon.

I chose to do my internship at the Central bank of Lebanon for its particularity which differs from other
banks. In other words, the work of the Central Bank is closely linked to the public sector and other
banks. As with commercial banks, their work is linked to individuals.

The training I did started on July 5, 2021, and ended on July 29, 2021. I did my internship at the
Central Bank of Lebanon in its branch in ESA. During my internship, different central bank employees
gave lectures about different central bank departments, in addition to lectures on Kafalat, Midclear, and
Islamic banks. Each conference starts at 9:00 a.m. and ends at 1:00 p.m.

This report is divided into 4 chapters: in the first chapter, I will present an introduction to the report, in
the second chapter we will deal with the Bank of Lebanon and its sector of activity and the structure of
the central bank, the third chapter will be on the different missions of the departments of the bank and
the balance sheet and finally, we will deal with the general conclusion.

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 Chapter 1: Lebanese banking sector and BDL

1. Lebanese banking sector

Lebanon is in the pains of a profound monetary emergency, fashioned by many years of endemic
debasement, waste, and bungle that is compromising its strength and is portrayed by the World Bank as
probably the most profound wretchedness in present- day history.

Lebanese banks have kept investors out of their dollar accounts and obstructed exchanges abroad.
However, under Circular 151, gave last year, investors have been allowed to pull out dollars, with the
assets paid in the nearby cash at a pace of 3,900 pounds to the greenback.

That is just with regards to 33% of the worth of dollars on the underground market – which on
Thursday were exchanged at around 13,000 pounds to the dollar – yet it has been the solitary way
numerous Lebanese have had the option to get to their assets.

The monetary emergency has cleared out positions, raised worries for developing yearning, and put the
greater part of the Lebanese populace underneath the destitution line. The Lebanese pound has lost
around 90% of its worth since late 2019.

The national bank's unfamiliar stores, which have been utilized to endowments essential merchandise
like fuel, medication, and wheat, have dropped from more than $30bn preceding the emergency to
around $15bn in March.

"There is a significant financial emergency and none of the culprits have been rebuffed, actually, they
have been permitted anything they desire to do and the culprits are the national bank and the business
banks.

The Bank of Lebanon has an important role in the Lebanese banking sector, where it supervises the
banks through the Banking Supervision Commission. He ensures that the banks apply the banking
system issued by the currency and credit code issued by the Bank of Lebanon.

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In addition, there are different types of banks in Lebanon:

• Investment banks: These are the banks that give out long-term debt. These banks are sometimes
called long-term merchant or credit banks.

• Islamic Banks: These banks operate according to Islamic precepts which prohibit any collection and
payment of interest on money. These are the banks that itswhose statutes include a commitment not to
violate Islamic law in the operations of the private and non-beneficial business.

2. Bank of Lebanon
The Central bank of Lebanon was founded in 1963 and began operating on April 1, 1964, under the
Code of Money and Credit. The Governor of the Bank is appointed by a decision of the Council of
Ministers for a renewable period of six years. He has absolute power with regard to administration and
vis-à-vis the state over the application of the Code of Money and Credit. The 4 vice-governors are
appointed on the recommendation of the governor and the ministry of finance for a period of 5 years,
renewable, and they have the power to help in the management of the bank, the implementation of the
tasks defined by the governor.

The main center is in Beirut-Al Hamra and has 9 branches distributed in: Tripoli, Jounieh, Baalbek,
Saida, Bikfaya, Al Nabatiyeh, Alei, Tire, and Zahle.

The main missions of the Central Bank of Lebanon are to define a fiscal policy to save the stability of
the Lebanese pound by influencing the level of interest. In addition to issuing cash and installing the
Lebanese pound exchange rate.

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 3. Organizational chart

Source : Central Bank of Lebanon

https://www.bdl.gov.lb/tabs/index/1/285/BDL-Organization-Chart.html

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 Chapter 2: Missions of BDL’s department

A. Departments
1. Banking Supervision Commission:
It is a committee affiliated with the Governor of the BDL, it was created on 9/5/1967 and consists of 4
members and the Governor is the President. This committee aims to maintain financial and banking
stability. Relations with the BDL is that of cooperation and coordination where the committee can by
decision of the Governor Audit the status of a current bank It is subject to the supervisory authority of
the Superior Banking Commission because this body certifies its work and any modification thereof
tThe scope of its work is limited to: commercial banks operating in Lebanon, local financial
institutions, brokerage companies, leasing companies and registered exchange companies.

The committee fulfills two roles:

• Office monitoring: This is the monitoring carried out by the committee from inside its offices
through specialized observers.

• On-site supervision: This is very important supervision, as it complements the office's

supervision work, particularly in terms of verifying the validity of periodic bank statements
from the BDL the Banking Control Commission. They are assigned to monitoring the work of
banks and financial institutions. Its team is made up of 3 to 7 observers. Field supervision has
an important role because it studies the banking risks to which the bank may be exposed and
precisely sterilizes the administrative situation. It is divided into 3 stages: First, it makes
preliminary preparations where it gathers information from several departments of the
committee in the form of a comprehensive field report on the conditions of a particular bank.
Secondly, you go to the bank and carry out follow-up operations, where you inform the bank
manager of the mission entrusted to the field team, then the main managers get to know each
other. Finally, you write a detailed and complete report at the end of the study which he carried
out.

2. Special Investigation Commission:

It is a body affiliated to the ruler, and one of its tasks is to combat money laundering and combat the
financing of terrorism, which is considered a cross-border crime. It receives reports of suspicious
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transactions, analyzes and verifies them, and ensures that lists of suspicious accounts are provided by
all banks and financial institutions. After verifying suspicious transactions, you lift bank secrecy on the
accounts and then impose penalties.

a. Combating money laundering: It is any act or attempts to conceal the source of funds resulting
from a criminal act or dealing with illegal funds, which is considered a predicate crime. The
authority investigates suspicious transactions by lifting bank secrecy on suspicious accounts.
b. Combating the financing of terrorism: It is an act intended to provide material support or
assistance in providing resources for carrying out terrorist operations. The easiest way to collect
money is to fund through charitable work, so that groups under the name of charitable work
collect money and provide it to terrorist organizations.
c.

3. Financial Operations Directorate:

The Lebanese economy is based on the Lebanese pound and the US dollar. There are policies that
affect the overall economy and they are:

1- Economic legislation and control by ensuring the validity of competition through

transparency, i.e. honesty, and open work, in addition to holding everyone who makes mistakes
accountable. In addition, the fight against monopoly by ensuring the validity of competition,
which is the responsibility of the Ministry of Economy.

2- The fiscal policy, which is the responsibility of the Ministry of Finance through preparing the
general budget, collecting taxes, and giving tax incentives.

3- Monetary policy, which is the responsibility of the Central Bank, whose mission is to
maintain the safety of cash when there is gold coverage and to secure low inflation rates.

The Central bank of Lebanon determines the interest on the financial market as the price of money
through the equilibrium point between the supply and demand for money that determines the amount of
money in circulation and the interest on it. The Central bank of Lebanon can influence the volume of
liquidity in the market in 3 ways:

• If he wanted to reduce the volume of liquidity in the market, he would raise the mandatory
reserve ratio, which would raise the interest, and vice versa if he wanted to raise the volume of
liquidity in the market.

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 • Carrying out cutting operations by selling foreign currency in the market to reduce the
percentage of liquidity in the Lebanese currency.

• Carrying out open market operations through buying and selling treasury bonds to and from
banks to influence the level of liquidity.

4. Human Resources Directorate:

Established in 1963 with the establishment of the Bank of Lebanon under the name of the Directorate
of Administrative Affairs. In 1993, the Governor decided to restructure the bank and established new
directorates, and distributed them to his deputies. In 2005, the Directorate of personnel changed its
name and included three interests: The employees' interest in salaries, wages, and administrative
matters for employees, the health interest that deals with medical matters, and the social interest that is
interested in paying the Social Security Fund. In 2005, she became the Directorate of Human
Resources, where she applied strategic thinking. The Governor of the Bank has no other powers of
employment, promotion, and promotion of employees. The Directorate is responsible for personnel
matters and the application of legal provisions relating to labor law and social security. Consists of 6
interests: Polarization, employment/planning, qualification/salaries, wages/employees/audit/medical
services.

She works with the Ministry of Finance where she pays the payroll tax and wages for her employees. It
also works with the State employees' cooperative because some of the employees' spouses work in the
state institutions. And, finally," with the Social Security Fund, where it pays contributions and
regulates employees' transactions as guaranteed by the Social Security Fund.

Employees benefit from 3 guarantees from the Social Security Fund:

a. Sickness and maternity insurance: The employee must have completed 3 months of work since
the start of the Social Security Fund registration and the company has paid the required
contributions. The employer pays 7% of the monthly wage contributions and pays 2%, provided
that the maximum paid amount is 2,500,000 L.L. As for the Bank of Lebanon, the amount of
567,000 L. For every content and who is responsible for it.
b. Family compensation system: The employer pays the full contribution by 6% and the maximum
paid by the employer must be 1,500,000 LL... Every employee must inform the administration
of any change in family status such as marriage, divorce...

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 c. End-of-Service compensation system: Employer pays the full contribution at 8.5%. The
remuneration benefits from this compensation provided that he has completed at least 20 years
of service or has a disability of at least 50% that prevents him from doing any other work.
5. Department of preparation and Training:
The Directorate of preparation and Training was established at the Bank of Lebanon in 1996. It now
has three interests: The Planning and Development Department, the Program
implementationImplementation Department, the Financial Education Department. The main purpose
of this Directorate is to improve the quality of training especially for new staff in the bank as well as
university students who conduct training courses in the bank.

The Directorate of preparation and Training carries out its tasks through numerous local and external
conferences and training programs, targeting the employees of the banking, financial, economic, and
private and public sectors, the most important of which are:

1.Sending the Bank's various staff on external training missions to foreign central banks and
international financial institutions.

2. Partnership with the higher Institute of Business and training courses for Arab and foreign
central bank staff, as well as for the employees of the Bank of Lebanon and the Lebanese
financial sector.

Coordination with secondary schools, hosting students during the school year, preparing training
courses for them, coordinating with Lebanese universities and receiving students during the summer
holiday.

6. Cash Operations Directorate:

The Directorate of Cash Operations consists of a Director, Secretary, and 9 interests:
a. The issuing Authority: It shall send the papers and coins to the trade safe and branch storage
where needed. It also receives requests for withdrawals and deposits from commercial banks
a day before their execution.
The funds Department: The Trade Safe is received in the centers and branches by the Bank
of Lebanon payments and customer receipts. Fund trustees carry out arrests and payments
by intermediary circular No. 319.
b. The counting and counting Department: After and counting the deposits of the Bank of
Lebanon clients and sorting the banknotes and coins.
c. The interests of destruction: Destroy invalid banknotes.
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 d. The accounting department prepares the annual budget of the Directorate and manages the
accounts of the Bank of Lebanon clients and the expenses and imports of the Directorate.
e. The Treasury Department: Manages the operations of Treasury bonds to the public.
f. The Technical Support Service (TSS) monitors the proper functioning of machines and
handles minor faults. They are also technical condition books.
g. The Department of the Museum and the Memorial
h. The Anti-counterfeitingCounterfeiting Administration shall maintain and analyze forged
banknotes and coins and coordinate with the competent authorities. The condition books are
for printing banknotes and coins.

7. Finance Unit:
Among the most prominent loans offered by the Bank of Lebanon are:

a. Kafalat Corporation: This Company contributes to financing bank loans to support small and
medium enterprises. Guarantees are provided starting from 75% to 90% depending on the
program. The loan value is between 65 and 650 million for all currencies for guarantee
programs: Basic, additional, innovative, and start-up, small-scale farming, and green
guarantees. In the range of 300 to 1320 million Lebanese Lira only for guarantee programs:
Innovation, energy, renewable energy for internal use, renewable energy sold to third parties.
The period of loans between 7 and 15 years includes a grace period between one and three
yearsyears’ maximum.
b.
b. Incentives 2009: This Open Loans Scheme began on 1/1/2009 to finance new projects and
expand existing settlements in all economic sectors except real estate development. A grace
period is provided between 6 months and 4 years from the date of exchange. The payment
period is 10 years with the end of the grace period. The interest rate is 5.14% in Lebanese
Lira and in foreign currencies the cost of the money + 2%
c. Small loans: They are granted to small businesses with 4 people working and without
helping them create and develop their own production, tourism, or business projects. The
maximum loan is 20 million Lebanese Pound- LBP lira and the repayment period is 3 years
d. Education loans: These loans are granted in the Lebanese pound to support tuition fees in
various educational institutions. It is paid within 10 years and its interest does not exceed
3%.

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 e. Environmental loans: Loans granted to finance new projects designed to contribute to the
preservation of the environment, to mitigate the environmental impact, or to finance the
development of older projects to become environmentally friendly. The interest on these
loans in Lebanese lira is the interest calculated on the Lebanese treasury bonds for two years,
either in the dollar or the euro, the rate for three months + 6%.
f. Media Production Loans: These loans have established 1% interest to support media
production for a period of 16 years with a two-year grace period. The maximum loan limit is
4.5 billion Lebanese pounds, provided that 90% of the media work is in Lebanon.

8. Accounting Directorate:
The Directorate provides the bank with information, reports, and statements of all kinds by recording
the calculations, showing the status of the accounts, and facilitating their monitoring within the
accounting standards adopted by the Bank of Lebanon.

From the tasks of the Directorate:

- Monitor and audit calculations every day;

- Calculate interest on current and frozen accounts of employees;
- Opening and closing internal accounts ;
- Prepare the budget for branch expenses.
Consists of 3 sections:
- Central accounting: This section prepares the interim budget and coordinates with departments
for amendment and closure of units;
- Banking: You are reviewing laws and circulars and are preparing a temporary balance sheet;
- Daily operations: You monitor closing calculations at the end of each day.

9. Foreign Affairs Manager:

On 23 December 1993, the Governor Riad Salama took up his duties in the bank. The Directorate's
functions are limited to the follow-up and preparation of research and studies related to the bank's
relationship with foreign and domestic institutions and can also develop reports, research, and special
studies. Consists of 14 employees divided into 3 sections:

- Strategic Communication benefit: It prepares letters to the deputies of the Governor;

- The interest inof external relations;
- DCI: This Section was created on 8 February 2008 after the DCI was incorporated into the
Directorate of Foreign Affairs .
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Main work of the Directorate:
- To examine the files received by the Governor from the bodies established with the Bank;
- Study of reports and books transmitted to the bank by various local institutions (ministries,
public departments and banking associations) issued by local external institutions (Lebanese
embassies abroad) or international organizations .

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 10. Islamic banks:
Established in Lebanon on 11 February 2004. It has established 5 banks in Lebanon. Islamic banks are
defined by the concept of Lebanese law as a bank whose system includes compliance with Islamic law
and non-violation in its operations. The Lebanese law set the bank's capital at 150 billion Lebanese
pounds, which are to be freed in cash." If the banks belong to a Lebanese commercial bank or a
foreign bank whose capital exceeds 150 billion Lebanese Poundlira, the value of the capital will reach
30 billion Lebanese liraPound.

Banks carry out several financial operations:

a. Speculation: The employer (the customer) places deposits in the bank (speculators), the latter
invest them in the market, and divides the profits according to the agreed rates. In the event of
loss, the employer shall bear the full losses.
b. Participation: The customer and the bank shall place an amount of money to invest in and shall
distribute the profits according to the ratio of the parties to the contract and the losses according
to the proportion of the capital that each party has traded.
c. Murabaha: The sale of movable or immovable funds at the cost-plus-profit rate. Payment can
be by installment.
d. Ijara
e. Ladder and parallel stairway: The bank will give its client an amount of money, and in return,
the customer will deliver a certain amount of transfers at a specified time.
f. Parallel Stacker: A process between a vendor and the bank that the bank will go to a third party
to make a particular commodity and the bank will deliver it to the seller.
g. Equity investment
h. Instruments
i. Symbiosis

11. Branch Directorate

The Branch Directorate was established in 1978. The Directorate, the branches, and the five interests
are coordinated:

1. Accounting Department:
 Budget for the expenditures and assets of the branches (preparation and implementation)
 Consistent operations
 Monthly postures u
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 2. The Treasury Department and Operations

To coordinate with the Cash Operations Directorate in relation to:

 Branch stock of cash

 Supply and transfer of funds
 Monitor different cash ratios

Coordinate with the Financial Operations and Payment Systems Managers on the organization and
consolidation of working mechanisms for Treasury bonds and current accounts.

3. Information Coordination Service

Coordination with the Directorate of Informatics in relation to: *

 Supervise the delivery of software to branches;

 Follow up on the use of hardware and software in the branches ;
 Continue saving and archiving information;
 Emergency plans to continue;
 Follow up on maintenance contracts for the hardware and software.

12. Legal affairs

Functions of the Directorate of Legal Affairs:

• Legal opinion on matters raised by the Chambers of the Bank;

• Legal opinion on applications from the banking and financial sector;
• Regulation of the Banking/Financial institutions Regulation ;
• Legal monitoring of banking sector conditions (Cash and Credit Act/Trade Act).

The Directorate is concerned with providing legal opinion to the Bank of Lebanon's departments for the
preservation of the Bank's rights, the mitigation of legal risks, and the regulation of legal documents in
the Bank of Lebanon's third (contracts/warnings). In addition to dealing with disputes arising between
Bank of Lebanon and others, and following up the files that are the subject of the legal dispute between
Bank of Lebanon and others with the Bank's lawyer and consultants.

19
It is studying the draft laws on the financial and banking system (referred to the Council of Ministers)
presented for discussion in the parliamentary committees, proposing bills that would develop the
banking sector, and drafting the regulatory and global laws for the banking sector and the general
public.

The Directorate of Legal Affairs shall have legal control over:

 Commercial banks, specialized and Islamic;

 Financial institutions;
 Finance leases;
• Exchange companies;
• Money transfer companies;
• Representative offices (Lebanese and foreign banks);
• Financial contours.
•

13. Compliance unit:

The Governor of the Central bank of Lebanon, based on the Monetary and Credit Law, in particular
Articles 70 and 174 of it, on the decision of the Central Council of the Bank of Lebanon, adopted in its
session held, 1/9/2013, decided that banks and financial institutions must “establish the working In
compliance with the “Department Compliance” tasks detailed in Article Five of this decision, it is
divided into: - “The Legal Compliance Unit” that detects legal risks and hedges them by taking the
necessary risks and mitigating them. - The “Verification Unit” of the implementation of the applicable
procedures, laws, and regulations related to combating money laundering and terrorist financing (Unit
Compliance CFT/AML) whose tasks are specified in Basic Decision No. 7818 dated 5/18/2001.

“Compliance Unit” means:

• By preparing a work program consistent with the size, nature and complexities of the bank or
financial institution's operations, in which it defines a work plan to review the compliance of
the bank or financial institution with the laws, and regulations in force.

• Identifying and evaluating the risks of non-compliance associated with the activities of the
bank or financial institution, especially the non-compliance risks associated with new products
and activities

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 • Assessing the effectiveness of the procedures taken by the bank or financial institution to
discover abuses.

• Ensuring the extent to which the employees of the bank or financial institution comply with
the policies set by the bank or financial institution by conducting appropriate tests.

• Carrying out procedures to verify compliance with the laws, regulations, procedures, and
instructions issued by the Bank of Lebanon, the Banking Control Commission, the Special
Investigation Commission, or any other competent authority.

• Keeping abreast of developments in laws and regulations and proposing the necessary
amendments to the policies and procedures of the bank or financial institution in line with these
developments.

• To ensure that the necessary corrective measures are applied when any violations resulting
from non-compliance are discovered.

14. Financial markets

The National Authority for Financial Markets was established by Law No. 161 dated August 17, 2011.
Its center is in Beirut.

Consisting of:

• The Council;

• General Secretariat;

• Financial Market Supervision Unit;

• Sanctions Committee.

In order to achieve its missions, the Markets Authority shall coordinate and cooperate with its
counterparts and with the Central bank of Lebanon or any other concerned authority or institution in
Lebanon and abroad.

The "B Markets Authority" is concerned with maintaining the safety of savings employed in financial
instruments by encouraging the financial markets in Lebanon and coordinating between the various
concerned sectors. It has the right to carry out the activities and tasks entrusted to it for this purpose,
including:
21
 • Organizing and developing the financial markets in Lebanon and seeking to increase the use
of these markets by investors and exporters in Lebanon and abroad.

• Reducing the risks of the system (Risk Systemic) in the financial markets

• Protecting investors from illegal, incompatible, or unfair practices, including the prohibition of
direct or indirect personal exploitation of privileged information in dealing in financial markets.
452

• Regulating how information is accessed by persons who distribute financial instruments to the
public

• Determining the working framework and organizing the professional activities carried out by
persons who practice business related to financial instruments and ensuring their adherence to
professional ethics

• Regulating and supervising the work of licensed stock exchanges or of persons providing
depository, clearing, or settlement services.

• Laying down the general regulatory framework for listing financial instruments and approving
their trading in stock exchanges

• Issuing licenses to market intermediaries who provide services to investors and exporters;

• . Issuing licenses for financial evaluation companies (Agencies Rating Financial), defining
their framework, and regulating them.

• Licensing collective investment bodies, including joint funds for investment in securitization
operations.

• Punishing administrative violations of the provisions of this law and the regulations taken in
implementation of it.

• Disclosing distinctive information or promoting false information to request prosecution for

exploitative or misleading crimes related to financial instruments or instruments or the issuers
of these instruments and instruments.

15. Department of Banking

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The Directorate of Financial Markets was established by Resolution No. 5317 dated 12/23/1993 to
form a unit of the Central bank of Lebanon It is concerned with following up the developments of the
financial markets, proposing the necessary circulars and laws for these markets and verifying the
proper conduct of operations and clearing of securities. It also supervises the accounts of exporters in
the financial market, and is concerned with improving and updating the performance of these markets.

The Department of Banking has two departments as follows:

• The interest of exchange institutions, contours, and financial institutions whose work is
limited to credit and financial leasing companies;.

• Department of financial and banking operations by electronic means and studies;

At the beginning of 2016, work was done to amend the administrative structure in cooperation with the
Directorate of Organization and Development and the Directorate of Human Resources to include:

• The interest of exchange institutions;.

• Department of financial and banking operations by electronic means and studies;.

• Department of contours and financial institutions whose work is limited to credit and financial
leasing companies.

The Directorate of Banking follows up on exchange institutions in Lebanon. Therefore, it studies the
files of these institutions when they are established, follows up on their activities in general, and
submits suggestions and reports related to this sector. The Central bank of Lebanon has reorganized
this sector, especially after the issuance of the new law regulating the money exchange profession No.
347 dated 6/8/2001. These companies were classified according to the nature of their activity, which
entailed setting the minimum capital for each of their categories for the aforementioned law. The
Central bank of Lebanon specified by circular No. 13 dated 27/9/200. The ceiling of travellers' checks,
provided that the checks for collection fees do not exceed 10 thousand US dollars. It also specified the
documents required to obtain a license, the facilities ceiling, which was set at 50% of the company's
capital, and the application system for full-time operations.

16. Directorate of real estate and financial assets

The Real Estate Asset Department consists of 6 sections:

1. Technical Department

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 • Studying and completing the engineering and real estate files

• Assignment and follow-up of experts and surveyors

• Studying expert reports and evaluating valuations

• Attending general assemblies

• Preparing various studies and reports

2. Legal Department

Organizing contracts of purchase, sale, investment, release, discharge, etc., follow-up on lawsuits, and
suggest appropriate legal steps when necessary, as well as the legal aspect in dealing with urgent
problems, preparing books, warnings, receiving guarantees, and others. In addition to following up on
the lettering of references to papers in kind, insurances, lawsuits, and others, and following up on the
items listed above, in coordination with the Legal Affairs Directorate.

3. Marketing department

• Preparing an annual marketing plan;

• Giving information about real estate;

• Receiving and following up on purchase orders and interest;

• Conducting solicitations for real estate monetization (advertising, preparing files, receiving
customers, opening offers);

• Preparation and follow-up of sales and investment transactions;

• Monitoring the real estate market.

4. Outdoor unit section

• Suggesting what is required to monitor, maintain and develop the real estate situation;

• Follow up and receive maintenance work;

• Periodic visits to real estate and accompany those wishing to buy or invest;

• Receipt and delivery of real estate;

• Securing the directorate's documents from the competent departments.

24
5. Archive Section

Archiving reports, documents, referrals, and others, and entering all documents and information into a
special program for the archive, as well as keeping the original title deeds, contracts, and important
documents in the safe of the main directorate, and following up the tasks of the archive department in
coordination with the Central Archives at the Central bank of Lebanon.

6. Information section

Keeping pace with the design and development of the directorate’s information program and managing
the information system upon completion of its programming, as well as following up on the above two
items in coordination with the Informatics Directorate

The Financial Assets Department consists of 3 sections:

1. Department of Recruitment:

• Preparing daily reports on the bank's reserves of foreign currencies, their sources and uses, and
monitoring the rates and amounts of interest collected and paid on them.

• Determining the banks that are allowed to deal with them and the employment ceilings for
each of them. Monitoring and following up on the conditions of these banks and adjusting the
specified ceilings when needed.

• Monitoring the financial markets and global interests and studying their effects on the bank's
employmeemployeesnt.

2. Credit Department

Credits granted to banks and the public sector under the Money and Credit Law and the Merger Law**
or special laws and according to the bank’s circulars in relation to:

• Studying the required advance file and proposing amounts and conditions.

• Submitting the study to the Central Council to take the appropriate decision.

• Follow up the implementation of the decision of the Central Council with the concerned
directorates and with the borrowers.

25
 • Monitoring the accounting of entries, balances, and disclosures related to these loans in
cooperation with the Accounting Department in the Financial and Real Estate Asset
Department.

3. Contributions and Participations Section:

 • Studying the financial conditions of companies in which the Central Bank of Lebanon
contributes or in which the Lebanese state is represented, through general assemblies and
the reports of the supervisory commissioners.
 Preparing any reports or studies related to the contributions requested by His Excellency
the Ruler or the Central Council that may reach the investor’s information statement:
(Prospectus.)
 Follow-up accounting for entries, balances, and disclosures related to these contributions.

The current contributions of the Central bank of Lebanon

▫ Middle East Airlines S.A.L

▫ Intra Investment Company SAL. and its subsidiaries

▫ Medclear s.a.l.

17. Directorate of real estate and financial assets

The Real Estate Asset Department consists of 6 sections:

1. Technical Department

• Studying and completing the engineering and real estate files;

• Assignment and follow-up of experts and surveyors;

• Studying expert reports and evaluating valuations;

• Attending general assemblies;

• Preparing various studies and reports.

2. Legal Department

Organizing contracts of purchase, sale, investment, release, discharge, etc., follow-up on lawsuits, and
suggest appropriate legal steps when necessary, as well as the legal aspect in dealing with urgent
problems, preparing books, warnings, receiving guarantees, and others. In addition to following up on
26
the lettering of references to papers in kind, insurances, lawsuits, and others, and following up on the
items listed above, in coordination with the Legal Affairs Directorate.

3. Marketing department

• Preparing an annual marketing plan;

• Giving information about real estate;

• Receiving and following up on purchase orders and interest;

• Conducting solicitations for real estate monetization (advertising, preparing files, receiving
customers, opening offers);

• Preparation and follow-up of sales and investment transactions;

• Monitoring the real estate market.

4. Outdoor unit section

• Suggesting what is required to monitor, maintain and develop the real estate situation;

• Follow up and receive maintenance work;

• Periodic visits to real estate and accompany those wishing to buy or invest;

• Receipt and delivery of real estate;

• Securing the directorate's documents from the competent departments.

5. Archive Section

Archiving reports, documents, referrals, and others, and entering all documents and information into a
special program for the archive, as well as keeping the original title deeds, contracts, and important
documents in the safe of the main directorate, and following up the tasks of the archive department in
coordination with the Central Archives at the Central bank of Lebanon.

18. Banking Directorate

The banking department consists of:

- Sscanning section,

27
 - Information department,

- Central Credit Risk Office,

- Central office for returned checks

The tasks of the survey department are:

- To check credit requests from banks;

- To examine banks' requests to establish new branches or merge,

- Supervising the financial position of banks, their sources, and uses of their funds,

- To keep up-to-date information on banks.

The Information Department collects information about banks, financial institutions, and related
entities. The Central Office of Credit Risk provides operating banks and financial institutions, upon
their request and in strict confidence, with information on the total credit granted to the debtor without
specifying the sources of lending. The Central Bureau of Bounced Checks provides the operating
banks, in strict confidence, with information about the bounced checks and/or their issuers.

19. Directorate of Statistics and Economic Research

The duties of the Department of Statistics and Economic Research are:

1) Preparing statistical data on economic and financial activities;

2) To provide information on economic, financial, and monetary conditions;

3) Preparing monthly and quarterly bulletins, reports, and other publications. In addition to
conducting research on economic, monetary, and financial issues.

The department consists of the Statistics Department and the Economic Research Department

20. Informatics Directorate

The Information Technology Department is responsible for the development and application of
information technology in the Central Bank.

Its role includes:

• Automation of bank business functions using the latest proven technologies;

28
 • Applying the best IT standards;.

• Provide, develop, implement and manage the information technology infrastructure that
ensures the continuity of the provision of banking services and essential internal business.;

The Informatics Directorate at the Central Bank of Lebanon prepares the necessary informatics
programs to implement the aforementioned system, distributes them to banks and financial institutions,
and secures the necessary training for proper use and application.

21. Payment systems

This directorate was established on April 22, 2010, after the Directorate of Ongoing Operations was
abolished. It undertakes all tasks related to payment systems, including:

• Implementation of the new national payment system;

• Manage and supervise payment systems;

• Perform all types of clearing and settlement operations, in a particular clearing of checks,
cards, and transfer payments;

• Conducting studies on payment systems, and preparing relevant analytical and statistical
reports;.

• Achieving monetary and financial stability.

It consists of 3 sections:

1. Operations: It operates electronic systems (BDL-RTGS Instant Gross Settlement System,

BDL-CLEAR Retail Payment System, and PayGov System, which is in the process of working
on it) in addition to manual systems such as payment and check collection...

2. Monitoring: It supervises and controls the electronic payment systems

3. Research: It prepares reports and statistics that help in setting monetary and banking policies.

Supported electronic systems:

 BDL-RTGS Instant Gross Settlement: Issued on July 9, 2012, revolves around the transfer or
receipt of domestic funds to and from participants. This system offers a secure and reliable
payment method that adheres to international standards.

29
  BDL-CLEAR Retail Payment System, issued in May 2013, is a clearing system for retail
payment methods.
 PayGov: It is an application that facilitates the issuance and receipt of money from the
government.

B. Conferences
1. Kafalat

Kafalat was founded in 2000 as a publicly -beneficial Lebanese financial corporation that helps small
and medium-sized enterprises operating in Lebanon to obtain bank financing, by granting bank loans
based on studies and work plans submitted by loan applicants. Kafalat's programs are aimed at small
and medium-sized enterprises operating in one of the following economic sectors: Industry, agriculture,
tourism, artisanal production, and advanced technologies.
Support programs have been created to reduce the financial burden on SMEs that borrow to finance
their activities: Basic, additional, innovative, start-up, and innovation, for small agricultural enterprises,
green, energy, renewable energy for internal use, renewable energy sold to third parties.
The objectives of this company are:  

a. Servicing borrowers:

The guarantee provides a guarantee to the banks, thereby reducing the risk of the loan to the bank, thus
increasing the bank's desire to finance this activity.

b. Servicing of lending institutions (banks operating in Lebanon):

By reducing the risk on loans faced by lending banks.

c. Serving the Lebanese economy:

It helps these institutions obtain loan financing from the banking sector, enabling them to increase their
productive capacity by developing the financing of their economic activities, thus increasing their
investment and long-term production, as well as increasing employment opportunities.

22. Midclear
Midclear s.a.l. It is a center for custody and clearing of financial instruments for Lebanon and the
Middle East. It was established in June 1994 under Law No. 139 with a capital of LBP 2,800,000,000.

30
The Central bank of Lebanon contributes 98% of the capital, to which local and foreign banks and
financial institutions are affiliated, in addition to clearing institutions and exporters.

Medclear was established for the following reasons:

• Desire of the competent authorities to develop organized financial markets;

• Simplify the management of financial instruments;

• Make trading easy and safe among professionals;

• Facilitate the implementation of operations;

• Taking into account international regulations.

This system helps the financial intermediary to reduce the risk to the opposing team, the settlement of
transactions date (day +3), and the work of the broker becomes safe and contributes to the official
definition of the broker” in the financial markets. As for the issuers, it helps in obtaining in an easy way
information about the shareholders, reducing the cost of issuing certificates. And finally, it helps
investors to keep securities in a safe place.

Services offered by Midclear:

• Settlement and clearing of domestic financial instruments;

• Settlement and clearing of financial instruments listed in foreign markets;

• Management of shareholder records;

• Investment fund services management;

• Communication services via the SWIFT system and the Internet.

31
 Chapter 3: Findings and recommendations

1. Results

I learned from Banking Supervision Commission how to verify the validity of periodic bank statements
from the BDL the Banking Control Commission.

I learned how the Special investigation commission how to combating money laundering and the
financing of terrorism.

I learned from the Financial Operations Directorate how it determines the interest on the financial
market as the price of money through the equilibrium point between the supply and demand for money
that determines the amount of money in circulation and the interest.

I learned from the HR department how it pays contributions and regulates employees' transactions as
guaranteed by the Social Security Fund.

In the training and development department, I was able to form an idea of the work of this department
which helps to improve the performance of the bank by giving necessary training to the employees.

I learned from the Cash Operations Directorate how it sends the papers and coins to the trade safe and
branch storage where needed and receives requests for withdrawals and deposits from commercial
banks a day before their execution.

I learned from the finance unit how to prepare the interim budget and coordinates with departments for
amendment and closure of units, reviewing laws and circulars, and are preparing a temporary balance
sheet, and monitor closing calculations at the end of each day.

I learned from the foreign affairs department Study of reports and books transmitted to the bank by
various local institutions (ministries, public departments, and banking associations) issued by local
external institutions (Lebanese embassies abroad) or international organizations.

I learned from the branch department how to coordinate with the Financial Operations and Payment
Systems Managers on the organization and consolidation of working mechanisms for Treasury bonds
and current accounts.

32
I learned from the legal affairs how to deal with disputes arising between the Bank of Lebanon and
others, and following up the files that are the subject of the legal dispute between the Bank of Lebanon
and others with the Bank's lawyer and consultants.

I learned from the how to identify and evaluate the risks of non-compliance associated with the
activities of the bank or financial institution, especially the non-compliance risks associated with new
products and activities

I learned from the financial market department how to organize and develop the financial markets in
Lebanon and seeking to increase the use of these markets by investors and exporters in Lebanon and
abroad.

I learned from the banking department how to supervise the accounts of exporters in the financial
market and is concerned with improving and updating the performance of these markets.

I learned from the real estate and financial assets department how to Study and complete the
engineering and real estate files and the assignment and follow-up of experts and surveyors.

I learned from the Information Department how to collect information about banks, financial
institutions, and related entities.

I learned from the Statistics and Economic Research how to provide information on economic,
financial, and monetary conditions, preparing monthly and quarterly bulletins, reports, and other
publications. In addition to conducting research on economic, monetary, and financial issues.

I learned from the informatics department how to provide, develop, implement and manage the
information technology infrastructure that ensures the continuity of the provision of banking services
and essential internal business.

I learned from the payments system how to manage and supervise payment systems and perform all
types of clearing and settlement operations, in the particular clearing of checks, cards, and transfer
payments.

The lectures gave me information on several areas, for example, Kafalat helps new businesses start- up
by offering him a guarantee on loans. The mid-clear helps the financial intermediary to reduce the risk
to the opposing team, the settlement of transactions date , and the work of the broker becomes safe and
contributes to the official definition of the broker” in the financial markets. Finally, the Islamic banks
which give loans with almost zero interest.
33
 4. Constraints
I encountered several constraints: the first constraint was the difficulty of adapting to the work
environment since I acquired new experience in the banking sector which required a double effort on
the part of the employee.

The second constraint was how difficult it was to apply all the data learned at first glance, but it was
over time that this constraint was overcome.

However, it is thanks to the assistance of the employees to whom the task of guiding us, of initiating us
and also of providing us with new information, which is all the more effective than pragmatic, has been
assigned to us that we could not choose ourselves. A necessary track for the organization of our
information which however required, on our part, an additional effort for the “reformulation” of this
information and a personal documentation for a deepening of certain data.

5. Contributions and skills

Making a list of my skills first allowed me to take stock of my experience. It seems important to me to
take stock and to question myself, to see what can be improved, but also to become aware of my
efforts.

Then, the difficult exercise of explaining my skills, that is to say of formulating what I was able to do at
some point in my professional experience, offered me the opportunity to train to explain what my job
was, and therefore to express what I know and can do.

Putting the right words on activities, often repeated automatically, is a skill in itself, which has the great
advantage of bringing to light the sum of one's knowledge.

6. Recommendations
The central bank of Lebanon should propose a relatively ineffective subsidy plan (fuel, medical and
pharmaceutical products, food products) (because it subsidizes more, in proportion, the rich and
smuggled), but which was the only short-term solution term, given the lack of preparation of the public
authorities.

It should also set up an ad hoc committee, discreet since its formation, which will be responsible for
overseeing the restructuring of the banking sector, continues to adjust borrowing and deposit

34
remuneration parameters. It is necessary to wait for the default of the public debt in dollars
(Eurobonds), for the issue to come to the fore. .

Conclusion
As a conclusion, during my internship I learned new information regarding the work procedures of
each department. I was given the opportunity to be on the path to banking life and to know how to
compare the knowledge that I have already acquired and how it is practically done. Thus, I discovered
that the type of the work of the central bank of Lebanon differs from other commercial banks in that the
BDL has a relationship with other banks and with the public sectors while commercial banks have a
close relationship with individuals.

Contact with customers (public sectors and banks) has helped me communicate better with them, this
communication leads to better responding to their requests and meeting their expectations within a
limited time. In addition, it should be mentioned that the statute of the BDL and all the stipulations it
includes are implemented which subsequently reinforces the principle of the smooth running of the

35
bank's work. This inevitably reflects an image of a bank that promotes success and excellence. This
helps the bank to secure a bright future marked by continuity and success.

This internship was truly an opportunity which greatly helps the intern better instill fundamental
cognitive acquisitions, already masterfully acquired, and this to translate them into professional life.
The internship is only a fundamental and inevitable support from which one undoubtedly draws an
incomparable and effective experience which contributes to the formation of a personality whose spirit
is critical and judiciously oriented towards any situation that may relate to the field in question.

36
References:
 https://www.banqueduliban.gov.lb/tabs/index/4/220/bdl%20Summer
%20Training.html
 http://www.bdl.gov.lb/news/more/5/195/64
 http://www.sci.gov.lb
 http://www.kafalat.com.lb
 https://www.bdl.gov.lb/circulars/download/456/ar
 https://www.bdl.gov.lb/laws/download/61/ar
 https://www.banqueduliban.gov.lb/files/tabs/MSBDtrainingsectionJuillet2017Fin
al-.pdf
 https://www.bdl.gov.lb/tabs/index/1/140/Departments.html
 https://www.bdl.gov.lb/circulars/download/11/ar
 https://www.aljazeera.com/economy/2021/6/3/lebanons-central-bank-u-turns-
after-dollar-withdrawal-backlash

37
38