Lebanese banks are well protected
Lebanese Central Bank Governor Riad Salameh said Wednesday that Lebanese banks have amassed provisions to protect their equities which are not subject to prohibitions. “Lebanese banks are sound and operate according to professional norms and regulations.
They have amassed provisions to protect their capitals which are not subject to sanctions,” Salameh told a group of businessmen and merchants at a luncheon held in his honor by the Beirut Chambers of Commerce.
Lebanese banks have increased their provisions against non-performing loans following the events in Syria and Egypt, measures considered crucial to protect the reputation of local banks at a time when the U.S. and EU are tightening the noose on money laundering and terrorist funding.
Salameh also commented on the step taken by Washington’s Foreign Account Tax Compliance Act to uncover all the bank accounts of U.S. citizens overseas. “This law only affects American citizens and will have no bearing on Lebanese nationals or other nationalities. We are preparing a mechanism to implement the U.S. action in accordance with the Lebanese law and in a way that will not affect the banking secrecy law,” Salameh explained.
It is not clear how many U.S. citizens have bank accounts in Lebanese banks but unconfirmed reports say that thousands of Lebanese with American passports may have accounts in local banks. The country’s banking secrecy has attracted Lebanese, Arabs and foreign nationals who were seeking some kind to protection for their assets.
But since 2001, the Lebanese authorities bowed to mounting pressure to tighten supervision on all accounts to ensure that there were no attempts to launder money or fund suspected terrorist groups. For this purpose, Lebanon formed the Special Investigation Commission to investigate suspected accounts and to lift banking secrecy if the need arose.
Salameh also brushed off claims that Lebanese banks operating in Syria and Egypt suffered losses due to the political turmoil in these countries. “There are lots of rumors about losses incurred by Lebanese banks either in Syria or Egypt. There were also rumors that these banks in these countries are subject to economic sanctions. These reports are pure rumors. Lebanese banks are sound and are operating in accordance to the laws,” the governor stressed in his speech.
But reports show deposits and assets of Lebanese banks in Syria have dropped sharply in 2011 though it is not certain whether the drop had any impact on the profitability of these banks. Salameh sounded upbeat about the future of Lebanese banks despite the difficult political conditions in Lebanon and the region.
“The Lebanese pound will remain stable and we have the means to achieve this task. Interest rates will also remain stable. Our intervention in the markets in the first six months of 2011 has demonstrated our capability to subscribe to the treasury bills to keep interest rates low and at the same time inject more cash to the treasury,” Salameh said.
- Deflation shocks in emerging markets and the GCC currency peg
- Crashing oil: has the time come for GCC countries to tax their citizens?
- Moody indeed: how did Moody's rate the ME's banks for 2015?
- The Middle East's Switzerland? Lebanon's banking secrecy is here to stay
- Precious retirement: why UAE expats are moving their pensions out of the UK