• Home
• Financial Services
• News Article

Azhari: U.S. Treasury not out to harm Lebanese banking sector

15 March 2011

BEIRUT: A leading Lebanese banker dismissed Monday some media reports that the U.S. Treasury will target the banking sector in the country.

“The U.S. Department of the Treasury’s accusation of Lebanese-Canadian Bank does not aim at causing damage to the Lebanese banking sector and the incident was very much exaggerated by the media,” BLOM chairman Saad Azhari told The Daily Star during a lunch at a hotel in Beirut organized by the bank in honor of the media.

On Feb. 10, the U.S. Treasury accused LCB of money laundering and of having links to Hezbollah, a group which Washington labels as a terrorist organization. This prompted Central Bank Governor Riad Salameh to travel to Washington to hold urgent talks with officials from the U.S. Treasury.

Despite the secrecy that had shrouded the talks, Salameh tried to allay the fears of the market by giving assurances the U.S. had no intention to punish the Lebanese banking sector.

But Salameh, at the request of the U.S. Treasury, persuaded LCB chairman George Abu Jawdeh to sell the bank’s assets to other leading banks until the dust settled. SGBL won the bid to control the entire stake in LCB .

Azhari said there were no political motives behind these accusations. He added that Salameh had assured bankers on several occasions that the Lebanese banking sector was safe and that no threats existed against Lebanese banks.

Responding to a question about the impact of regional events on the flow of deposits to Lebanese banks, Azhari said the chaos prevailing in the Arab world would definitely affect the banking sector in Lebanon to some extent.

“Lebanese banks will probably witness a slower increase in deposits due to a drop in the flow of remittances by Lebanese people working in countries that are plunged into crisis,” he said.

However, Azhari does not expect this drop to be huge. “The increase in deposits in 2011 will definitely be lower than the increase recorded in 2008. But we will still witness a good growth in deposits and loans this year,” he said.

Azhari said that the drop in deposits during the first two months of 2011 did not necessarily reflect the trend in deposit growth in the coming year. He related this drop to “window-dressing” practices by banks. Window dressing means fund managers will sell stocks with large losses and purchase high-flying stocks near the end of the quarter. These securities are then reported as part of the fund’s holdings.

According to Azhari, the average growth rate of the banking sector during the past two years exceeded 17 percent while the sector’s assets were three times bigger than the country’s GDP, in addition to its sustainable profits which exceeded $1.6 billion in 2010.

Azhari also gave a brief overview of BLOM Bank’s achievements and awards. “In 2010, we have been granted ‘the CEO of the year in the Middle East for 2010’ award,” he said.

BLOM Bank said on Jan. 31 that the bank had attained the highest return on average equity at 21.1 percent, and its total profits reached $330.7 million, which is $37.7 million more or 12.9 percent higher than the profits reached in 2009. It added the bank’s assets had reached $22.3 billion, $1.6 billion more or 8 percent higher than the assets attained in 2009. Deposits totaled $19.6 billion, a rise of $1.6 billion or 9.2 percent, and equity reached $1.9 billion, a growth of $195 million or 11.5 percent.

© Copyright The Daily Star 2011.