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The boom in Beirut’s banks 5, December 2008

Posted by thegulfblog.com in Lebanon.
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The property market in Beirut does not change that much. Despite the civil wars, fractious politics, occasional bombs or Israeli invasions, property prices look on these events with a weary disdain and don’t really budge. Beirut will always be sought-after and whatever crisis is affecting it will pass. True, there will be another around the corner, but c’est la vie. Beirut will, nevertheless, still be Beirut.
 
This resilience has, according to the BBC, passed on to Lebanon’s banks too. Business, the BBC correspondent assures us, is booming. Beirut’s vaults are full to bursting and banks are reporting record deposits. This is, however, not only due to a robust attitude but more specifically thanks to the Governor of Lebanon’s Central Bank, Riad Salameg. He foresaw the coming crisis to some degree and urged Lebanon’s commercial banks to reign in their exposure to international markets. Furthermore, Lebanon as a country has something of a conservative banking frame of mind so that banks are not allowed to incur that much debt, must have 30% of their assets in cash and risky speculation is not allowed.
 
There are, however, a few darker clouds on the Lebanese horizon. Remittances from abroad make up almost one third of the whole Lebanese economy and these will no doubt be hit by the crisis. Furthermore, whilst there has been conservative and sober banking practiced in Lebanon for some time now, this has not been the case at the governmental level. Lebanon is, therefore, per capita, the most indebted country in the world. Though, it must be said, that it has had a lot to recover from in recent decades.