BEIRUT: Central Bank Governor Riad Salameh said Wednesday that Lebanese commercial banks are capable of weathering any financial, political and security risks thanks to the conservative system adopted by these lenders.

Salameh, speaking at the opening of a conference to mark the 90th anniversary of Fransabank at Adnan Kassar Edifice for Arab Economy, stressed that Lebanon enjoys a sound financial situation strengthened by the appropriate monetary environment.

“However, this was achieved through lengthy efforts, with the aim of building up a solid and strong system, characterized by its conservatism, and [banks are] well equipped to face any financial risk, political risk or security-associated risk,” the governor added.

He said that the conservative model adopted has borne fruit, as shown by the progress recorded in the balance sheet of the Central Bank and of Lebanese banks in general.

“Our conservative banking model is based on a good capitalization. Lebanese banks are already meeting the 7-percent solvency ratio required by Basel III. We have put an objective to reach the 12-percent solvency ratio by 2015, as stipulated in the recent BDL circular and agreed upon with banks. Moreover, a 30-percent minimum liquidity was imposed more than 15 years ago, bringing down the level of leverage to 10 times against the own funds of a bank,” Salameh explained.

Despite Salameh’s assurances, Lebanese banks have been impacted by the unfolding security developments in Syria as well as the seemingly endless political bickering in the country.

Growth in assets, deposits and profits of most leading local banks last year was relatively slower than in 2010 and 2009. However, experts and even international rating agencies were not too concerned about the ability of Lebanese banks to cope with the crisis engulfing the region thanks to their massive liquidity, although these lenders still have high exposure to the public debt which now stands at $54 billion, representing 138 percent of the gross domestic product.

Salameh also commented on efforts to check the rise of inflation and keep the Lebanese pound stable.

“The Central Bank has constantly taken initiatives, some of which were not classical, in order to maintain the stability of the Lebanese pound and preserve liquidity in the banking sector. As a result, the inflation rate in Lebanon, though varying at present between 5 percent and 6 percent, was maintained for many years below 4 percent. But we will spare no efforts to reach this rate again in 2012/2013, despite the recently approved wage hike that penalizes inflation by 3 percent,” he said.

Salameh reiterated that despite the high public debt, the Central Bank has always striven to ensure stability and to prevent any default by the government or banks.

“[The Central Bank] has filled the gaps in government funding, while avoiding inflation. It has also facilitated mergers between ailing banks and stronger ones, with no losses incurred by depositors or correspondent banks. This policy is still applied but we will not allow mergers between the first 11 banks,” Salameh said.

Chairman of Fransabank Adnan Kassar gave credit to Salameh for his endeavor to keep the economy stable.

“In a regional world marked with political uncertainties and a global world faced with economic difficulties, we must recognize Lebanon’s comparative advantage and its own secret for success. It is the Lebanese people and their ability to meet challenges with confidence. It is the Lebanese economy and its ability to surmount obstacles with a passion and resilience,” he said.

Kassar added that Lebanon has proven its superb ability to adapt to changing conditions in difficult times and to safeguard its advantages.

“Our economy is backed by a strong banking sector that continues to overcome difficulties with success,” he said.

Philippe de Fontaine Vive, the vice president of the European Investment Bank, highlighted the activities of the bank around the world.

“As a banker for Europe and the Mediterranean, EIB is taking risks to deserve trust and to make the best use of its leverage for the real economy. But to play a role in economic sustainable development, a bank must also benefit from a consistent regulatory framework. Policy makers must define and encourage optimal conditions for banks to finance the real economy through long-term investments,” Vive said.

He said that the American financial crisis should not lead European or Mediterranean authorities to stop investing in a common future.