BEIRUT: Central Bank Governor Riad Salameh said the Federal Bank will not be affected by the U.S. accusations that Cyprus-based FBME Bank was involved in money laundering and terrorist funding.
In his monthly meeting with a delegation from the Association of Banks in Lebanon, Salameh indicated that the designation of the Cyprus-based FBME Bank as a primary money laundering concern by the U.S. Treasury Department would not have any implications on the Federal Bank of Lebanon sal.
He said the Saab Financial Group owns FBME Bank and the Federal Bank of Lebanon sal, but he noted that the Federal Bank of Lebanon sal was an independent entity and was compliant with the requirements of the Lebanese monetary and regulatory authorities.
The Saab family has repeatedly said that the Federal Bank of Lebanon is fully complying with all international resolutions and decisions and most notably the anti-money laundering decisions.
Salameh also noted that deposit inflows into the banking sector improved in June and forecast total deposits to grow by about 5 percent to 6 percent in 2014, adding that the expected growth rate in deposits supports the stability of interest rates and of the foreign exchange market.
The governor vehemently denied some media reports which claimed that the government was running out of funds and will not be able to pay the salaries of the civil servants.
He stressed that government deposits at the Central Bank were high enough to meet the government’s financing needs without the bank’s intervention.
Salameh said the Central Bank agreed to provide the government with the necessary funds in foreign currency to settle the latter’s obligations in foreign currency, given that the government reached its borrowing ceiling and requires Parliament’s authorization for such borrowing.
He considered that supporting the government’s needs in foreign currency would not weaken the Central Bank’s balance sheet, and added that the Bank decided to increase the issuance of Certificates of Deposit in foreign currency and to accept additional bank deposits in foreign currency despite the high interest rates on such deposits. He said that this process would continue until the current constitutional vacuum is filled.
A version of this article appeared in the print edition of The Daily Star on August 05, 2014, on page 5.