Lebanese Pound Foreign Exchange

 

Lebanese banks halt regional growth plan due to the Arab awakening

Published on March 1, 2012 by   ·   No Comments

Lebanon’s well capitalised banks have halted plans for regional growth, after the Arab awakening closed off the window for expansion opened by the global financial crisis.

The country’s banking sector is flush with cash but short of tempting opportunities now that formerly attractive markets such as Syria and Egypt are in political turmoil.

The move is a setback for Lebanese bankers, who had hoped to reclaim the position at the heart of the Arab world’s financial services industry that Gulf countries seized from them decades ago.

“Last year, regional expansion for all practical purposes was put on hold,” says Nassib Ghobril, the chief economist at Byblos Bank.

In late 2010, Lebanon’s big banks were seeking to move away from a reliance on holding government debt and plunge instead into regional markets. Buoyed by strong growth in the local economy and soaring deposit levels, one large bank was talking about having as much as 50 percent of its assets overseas by 2015.

But as the Arab spring erupted, exposed institutions had to take significant provisions in Egypt and Syria – $45m in the case of Banque Audi, Lebanon’s largest bank.

The regional turmoil led the credit rating agency Moody’s to downgrade the sector’s outlook from stable to negative at the end of last year, as the big banks suffered falling profits growth.

The blow the Arab awakening delivered to the banks’ regional expansion strategy was particularly hard, given the relatively small size of the Lebanese market and their desire to tap overseas markets.

Lebanon’s neighbour Syria went into a dramatic economic decline as a result of the near-year long uprising against President Bashar al-Assad’s regime and the international sanctions that followed the bloody crackdown by his security forces. Egypt, once one of the region’s fastest-growing economies, faces an uncertain economic future as a fractious opposition and regressive military council vie for power.

Bankers play down the impact of the political upheaval, with Freddie Baz, the chief financial officer for Banque Audi, saying it has “not affected our overall risk profile”, and adding: “Our assets in Syria represent less than 3 per cent of our earnings.”

At the same time, representatives of all three of the big banks insist that overseas expansion remains the strategy in the medium term. “We still believe the right choice for Lebanese banks, the big ones, is to become regional banks,” says Fadi Osseiran, the general manager of Blom Bank’s investment arm, Blominvest.

Latest Lebanese Pound Exchange Rates

Readers Comments (0)




*
Lebanon Money Transfers

Looking to transfer into or out of Lebanese Pounds? Make sure you get the very best foreign exchange deal, beat bank exchange rates by several percentage points using Currency Solutions (enquire below):