Central Bank Cautions Lebanese Banks about Spanish, Greek Counterparts

Central Bank Governor Riad Salamé asked Lebanese banks to be cautious in their dealings with Spanish and Greek banks, given the precarious

situation of the banking sector of the two countries and where governments may need to inject cash in banks to maintain stability, as reported by Lebanon This Week, Byblos Bank economic publication.He advised Lebanese banks to restrict their dealings to Spanish and Greek banks that are considered systematically important, as their respective governments would intervene to support and protect these banks.


He indicated that domestic conditions are positive, as the Central Bank continues to buy US dollars in the market and has purchased about $1bn so far this year. He added that subscriptions to Treasury bills are showing surpluses and that bank deposits are growing at an annualized rate of 8%, which is a higher pace than expected. He estimated that real GDP growth in Lebanon for this year could be higher or lower than the International Monetary Fund's projection of 3%, depending on the developments in the country.


He considered this level of growth to be acceptable in the current environment and compared to expected growth rates in the oil-importing economies of the MENA region. In parallel, Governor Salamé



He noted that the Central Bank of Lebanon places most of its foreign currency reserves at other Central Banks rather than at commercial banks. He encouraged Lebanese banks to form teams at each institution to follow closely the developments in Europe that might affect the Lebanese banking sector. He pointed out the need to follow the fluctuation of spreads on credit default swaps (CDS) given that they reflect the perceived level of risk and provide a general view despite being a speculative market dominated by hedge funds and influenced by rating agencies.


Also, Governor Salamé indicated that the implementation of the United States' Foreign Account Tax Compliance Act (FACTA) will not compromise the banking secrecy laws in Lebanon. He noted that in case a client with U.S. nationality does not comply with a bank's request for information, the client can be referred to the Special Investigation Commission against Money Laundering and Terrorism Financing. He added that Lebanon may not be a priority at the start of FACTA's implementation due to the relatively lim- ited number of U.S. nationals who have accounts at Lebanese banks compared to other countries such as Switzerland, Luxembourg and Austria.



He considered that the Central Bank could play the role of agent on behalf of the Lebanese banking sector, rather than having each bank reach a separate agreement with the U.S. Internal Revenue Service, in case the latter requests such an arrangement. He added that Lebanese banks have enough time to prepare for FACTA, as the IRS has yet to issue the corresponding compliance program.


Further, the ABL asked Governor Salamé to coordinate with the Finance Ministry to remove some of the obstacles to the proper func- tioning of Islamic banks in Lebanon. It noted that Islamic banks do not benefit from subsidized interest loans, given that such banks operate on the concept of profit sharing. It added that Islamic banks are paying value added tax, despite that banking and financial services are exempt from this tax. Further, it said that the stamp fee imposed on commercial banks' loans is also applied to Islamic banks even though the latter engage in profit-sharing rather than in direct lending.


Migration to cities is increasing so much that, by 2050, the UN predicts that approximately two thirds of the world’s population will be living in cities.


  • A fundraising event, entitled Think Green, will be held by Zero Waste ACT for all its business members on September, 10,2013, at WHITE, Dora.
  • The Green Mind Association invited all Green Mind Award Participants, finalists, runner ups and winners to the GREEN MIND DAY on  Jan-16-2013 in Beirut, to create a platform where interested Venture Capital and Potential Investors met with participants.
  • A green initiative launched by Ashrafieh 2020 project aims to transform Ashrafieh into a tranquil and unpolluted area.Green spaces allow residents to walk and ride bicycles.




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