LEBANON: Making bank off world financial crisis


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Lebanon, or at least its cash-laden banks, may benefit from the financial crisis afflicting much of the world.

Some analysts believe that the country’s solid banks present an attractive alternative to depositors without confidence in other international institutions. But others are less cheerful and warn of a lower appetite for investment and consumer spending.


According to Freddie Baz, the chief financial officer and strategy director of Bank Audi, one of Lebanon’s largest banks, more and more deposits are being channeled toward Lebanese banks.

In an interview with Reuters that appeared on Saturday, Baz said that Lebanese banks have not been affected by the crisis, thanks to a tightly regulated banking sector and an aversion to risk:

The Lebanese sector is benefiting from the crisis. Lebanese are feeling confident to bring back their savings from abroad. ... Maybe Lebanon was never considered a safe haven, but it’s becoming a haven of last recourse today because of the fact that the biggest names worldwide have been shaken.

Last week, Lebanon’s former minister of finance, Jihad Azour, told a local radio station that Lebanese banks would not be affected by the current crisis.

Unlike European and U.S. financial institutions, Lebanese banks have deposits that amount to almost three times the volume of loans granted. They are not in need of liquidity, Azour reportedly said in an interview with the Voice of Lebanon radio station.

Others are more bearish on Lebanon’s prospects. According to Nassib Ghobril, head of research at the Byblos Bank Group, another of Lebanon’s large banks, it is too soon to conclude that there’s been a deluge of deposits into the banking sector.

“We are still in the process of evaluating the impact of the crisis,” Ghobril said in a telephone interview with the Los Angeles Times. “We certainly hope that deposits in Lebanese banks will increase. There are signs of confidence, and the Lebanese banking sector has proved to be resilient.”

But the long-term economic outlook remains iffy.

According to Ghobril, it remains to be seen how much remittances sent home by Lebanese expatriates would decrease as a result of the crisis. Lebanon’s economy relies heavily on cash sent into the country by Lebanese living and working abroad.

International financial powerhouses, for one, appear to be confident in Lebanon’s insulation from the current financial turmoil. Citigroup said it was optimistic about the economic and financial outlook of Lebanon, as reported recently by Lebanon This Week, the economic publication of the Byblos Bank Group:

While the rest of the world could be grappling with a global recession, Lebanon could eventually lighten its debt burden and look optimistically to the future.

Raed Rafei in Beirut