BEIRUT: The prestigious London-based magazine The Banker selected for the third time Riad Salameh as the Middle East Central Bank Governor for 2012.
The new title which was bestowed on Salameh comes at a time when Lebanon in general and the banking sector in particular are under pressure from the United States and some European countries to combat money laundering and terrorist funding.
The U.S. Treasury in February 2011 accused the Lebanese-Canadian Bank (LCB) of money laundering and terrorist funding, allegations that were dismissed by the owners and managers of the bank as baseless.
But despite the strong objections by the bank’s owners, Salameh had to travel to Washington to meet officials from the U.S. Treasury in an attempt to salvage the LCB.
After intense negotiations with U.S. officials, the governor succeeded in persuading the owners of LCB to sell the bank’s assets to another local bank and SGBL managed to come up with the best offer.
Salameh, according to many bankers and financial analysts, has become somewhat of a hero in Lebanon thanks to his relentless efforts to preserve the reputation of the Lebanese banks in extremely difficult political conditions.
Last year the government of Prime Minister Najib Mikati unanimously reappointed Salameh as the governor of the Central Bank for the fourth time, a move which was seen by many as an attempt to keep the market relaxed.
Salameh first entered Lebanese public service on Aug. 1, 1993, a period when the country faced myriad financial obstacles, one of which was the sharp fall of the Lebanese pound against the U.S. dollar.
The Central Bank at that time was forced to intervene heavily in the local market to keep the pound close to LL1,500 against the dollar.
This intervention has kept the pound stable since 1995.
Under Salameh, Lebanese banks recorded remarkable growth in deposits and assets to the extent that the consolidated assets of these banks exceeded the country’s GDP by at least three times.
The Central Bank’s gross foreign currency reserves also reached an all-time high of $30 billion despite the delicate political situation Lebanon faced.
The banking growth has continued to the present day even if the pace has slowed somewhat – with deposits growing at more than 7 percent and loans rising by 15 percent in the 10 months to the end of October 2011.
In an interview with an Arabic Language newspaper, Salameh said Lebanon’s economy performed well in 2011 despite regional instability, adding that his main concern for 2012 is the large balance of payments deficit.
“Despite everything, the banking sector has overcome obstacles and achieved a growth in its deposits by 7 percent,” Salameh told Ad-Diyar newspaper in comments published Tuesday, adding that Lebanon ended 2011 with a stable currency.
The total assets of the Lebanese alpha banks – the 12 banks with deposits in excess of $2 billion – stood at $143 billion, a 6 percent year-to-date growth compared to the 11 percent growth in 2010 and 22 percent in 2009.
“The only negative factor was the balance of payments which recorded a deficit of more than $2.5 billion and this issue will be our main concern for 2012 in order to stimulate money transfer to Lebanon,” Salameh said.
Salameh added that the Central Bank has plans to support the increase of deposits in Lebanese banks which the governor said recorded a 7 percent increase in 2011.
He expressed confidence in the resilience of banking sector and expected it to maintain high growth in 2012.