ACROSS THE GLOBE

Lebanon 2015 | FINANCE | FOCUS: LEBANESE BANKS ABROAD

In the era of globalization, Lebanese banks are trying to take advantage of several opportunities, not just in terms of satisfying the needs of a large Lebanese diaspora, but also by filling the niche for anyone who needs optimum banking products and service delivery.

Lebanese banks have long been known for their penchant for expanding abroad. Taking pride in the efficient, professional, and highly-skilled staff, and extensive experience with an open banking system, Lebanese banks are expanding rapidly in the region and beyond, with part of their marketing pitch being their proven resilience

Over the past two decades, Lebanese banks have developed a widespread external network, with many offices, branches, sister companies, and subsidiaries worldwide. Stable despite challenging conditions, Lebanese banks developed an expertise in product and service delivery, which gives them a unique competitive advantage over other players, especially in countries struggling with weaknesses in communications and other public services.

According to Makram Sader, the Secretary General of ABL, 16 Lebanese banks, which represent nearly 86% of the sector, have presence in over 30 countries worldwide. In addition to covering major regional markets such as Saudi Arabia, the UAE, Bahrain, Qatar, Oman, Jordan, Egypt, Sudan, and Algeria, Lebanese banks operate in more distanced markets such as Turkey, Switzerland, France, the UK, Germany, Luxembourg, Monaco, Canada, and Australia, among others. Lebanese banks' extended network, spread in the main cities of the mentioned countries, boasts more than 240 branches, representing nearly 25% of total Lebanese bank outlets, with the volume of activity reaching 17% of their consolidated total assets.

Lebanese banks have been keen to strengthen their presence abroad mainly due to the small size of the domestic economy, with other pragmatic reasons imposing themselves as well. These include the political tensions in the region, the associated instability, which drives many Lebanese to migrate, as well as the economic slowdown (Lebanon's economy has expanded by merely 2% in 2014, with not much more expected in 2015).

But despite the small size and recent stagnation, the Lebanese banking sector and economy have always been characterized by a robust and well-thought-out openness to the world. The Lebanese banking system is known worldwide for active cooperation with international institutions, being solid and robust in implementing international standards, as well as providing a vital anchor of stability for the national economy despite the challenges. The Lebanese banking sector proved itself during several financial meltdowns that caused the collapse of many financial institutions around the world. This was due to years of experience operating in an unstable and risky political environment. As Makram Sader, the Secretary General of ABL told TBY, “The main factor behind the Lebanese banking sector expansion over the last 20 years has been the implementation of sound banking. We have been tested many times during the last 20 years, yet we survived several severe crises nationally, regionally, and globally.”

When assessing the presence of Lebanese banks abroad, it is also important to take into account the fact that they expand mostly to countries with a high sovereign risk rating, and that their share of the overall assets and capital accounts exceeds 86%, while the size of their international activity is only 17% of their consolidated assets, which means that the risks are well distributed in line with banks' market shares. In other words, the presence of Lebanese banks abroad constitute a well-diversified activity, following the concept of lower-weighted risks with consequently lower capital requirements.