Central Bank of Egypt (CBE) issued a new directive to introduce capital conservation buffer requirements, to be applied starting from 2016. This new directive aims to shore up banks’ capital base, to provide an additional layer of protection during times of distress and to prepare banks for upcoming Basel III requirements. Banks must set aside 0.625% of their capital as of January 2016 as a first Capital Conservation Buffer (CCB), then CCB requirement will be raised gradually in the upcoming four years from 0.625% in 2016 to 2.5% in 2019 (1.250% in 2017 and 1.875% in 2018). Banks are required to use earnings to form CCB; however they may use Tier 1 capital with permission from CBE. If banks use part or all of CCB, CBE may restrict dividend payments, until CCB is fully set aside again. In case of banks that start their fiscal year in July 1, they may implement CCB starting from July 1, 2016. Following the implementation of this directive, capital adequacy ratio minimum requirement will increase from current 10% to 10.625% in end-2016, then gradually up to 12.5% in 2019. (CBE disclosure)