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Lebanese banks pay high rates for operations abroad: Sfeir

BEIRUT: Lebanese banks operating abroad are being made to pay higher rates to central banks than their local competitors, a leading banker said Thursday.

“They [foreign central banks] impose on our active banks rates that are three times higher than what is imposed on their own banks, [a policy] which really affects our earnings, competitiveness, and the revenues of the mother bank,” Salim Sfeir, Bank of Beirut’s chairman and general manager, told participants at the Arab Economic Forum.

Sfeir urged commercial lenders to increase their private funds in order to maintain growth in Lebanon and abroad.

“The banks have to work on keeping a big amount of private funds to sustain their development and growth domestically and internationally,” Sfeir said.

“This requires a continuous increase of the deposits, and a continuous demand to increase the number of investors, which cannot be met except through the profits that would convince this very demanding category of people. This challenge is by far the biggest,” the BoB chairman added.

Sfeir added that Lebanese banks are fully complying with Basel III capital adequacy requirements.

Banque du Liban [the Lebanese Central Bank] is considered one of the strictest in the region regarding the issues of solvency and liquidity,” he explained.

Sfeir also highlighted the impact of globalization on the operations of Lebanese banks.

“Globalization, enhancing high competition in services and e-banking, pushes the banks to invest in high-tech industries to meet the demands of the customers, who require first class services equal to those offered by international banks. On the local scene, we have to be technologically up to the level. This, I believe, is a costly and permanent investment,” he added.

The chairman underlined the resilience of the banking sector, which weathered the recent global economic crises.

“The Lebanese banking sector was the only one internationally speaking that did not get affected by this worldwide economic downturn. In fact, the global deposits increased by 40 percent in Lebanon during the two years from 2008 to 2009,” Sfeir said.

“This is how our sector has succeeded in playing its role on the local and international scenes, mainly due to the 17 Lebanese banks spread over 90 cities in 31 foreign countries, and in holding 20 percent of the total assets of the Lebanese banking sector in general.”

 
A version of this article appeared in the print edition of The Daily Star on June 20, 2014, on page 5.

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Summary

"They [foreign central banks] impose on our active banks rates that are three times higher than what is imposed on their own banks, [a policy] which really affects our earnings, competitiveness, and the revenues of the mother bank," Salim Sfeir, Bank of Beirut's chairman and general manager, told participants at the Arab Economic Forum.

Sfeir urged commercial lenders to increase their private funds in order to maintain growth in Lebanon and abroad.

Sfeir added that Lebanese banks are fully complying with Basel III capital adequacy requirements.

Sfeir also highlighted the impact of globalization on the operations of Lebanese banks.


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