BEIRUT: The Central Bank governor said Monday Lebanese banks have succeeded in overcoming the negative effects of the Syrian conflict and managed to boost reserves and provisions.
“The Lebanese banks have overcome the effects of the crisis in Syria, Egypt and Cyprus and are currently operating in the same pattern before these problems started. These banks have amassed the required reserves and provisions so they can remain immune from the conflicts that surround them,” Riad Salameh told participants in a banking conference in Beirut.
He added that the growth in customer deposits up to June of this year has surged by 8 percent despite the deficit in the balance of payments.
The governor said that while interest rates in some emerging economies (Turkey, Brazil and India) rose in the past few years, the rates for Lebanese treasury bills remained stable.
“The monetary model which we built has protected the stability under exceptional circumstances. We assure that we will continue to maintain this model and preserve the exchange mechanism of the Lebanese pound against the U.S. dollar. We will continue to intervene in bond markets in order to preserve the interest rates in Lebanon,” Salameh said.
The Central Bank chief also denied rumors that some Lebanese banks were under pressure from the U.S. Treasury.
Leading Lebanese bankers have repeatedly said that U.S. authorities are pleased with new measures in Lebanon that are aimed to combat money laundering and terrorist funding.
In February 2012, the U.S Federal Reserve accused the Lebanese-Canadian Bank of money laundering and funding a terrorist organization. The bank reached a $102 million settlement with the U.S. government in June.
Commenting on the lack of a Cabinet, Salameh revealed that the Central Bank was now selling T-bills from its own coffers and issuing new dollar-denominated bonds to meet the foreign currency needs of the Lebanese state.
“The Central Bank has made similar initiatives which we did not want but were compelled to do them nevertheless,” he added.
Caretaker Finance Minister Mohammad Safadi told The Daily Star earlier that the Central Bank and commercial banks had met all the financial needs of the treasury this year, adding that the Finance Ministry would issue LL1.5 trillion ($1 billion) in T-bills before the end of this year.
The governor stressed that liquidity in the Lebanese banks represented 30 percent of the total deposits.