Resilient to regional risks
Salameh downplays Moody’s negative outlook; denies high credit exposure
The governor of the Central Bank, Riad Salameh, confirmed the banking sector’s resilience to the repercussions of turmoil in regional countries, mainly in Syria.
Salameh said that he disagrees with Moody’s recent negative outlook on the banking system. He said that the rating agency’s outlook was not based on any persuasive elements or new developments justifying it.
International ratings agency Moody's Investors Service has recently revised down its outlook on Lebanon's banking system to negative from stable. The agency attributed its outlook to “downside economic risks from regional political uncertainty, mainly in neighboring Syria.”
“Moody’s rating did not take into account the high liquidity of Lebanese banks, which exceeds 30 percent,” Salameh said. He said that stress tests, conducted on banks to evaluate the possible impact of regional risks on their performance, have shown that such impact is negligible and could reach a maximum of ten percent of the sector’s profits.
The governor also said that the banking sector is fully committed to the Basle III standards, especially in terms of capital adequacy which is currently seven percent. “We agreed with banks, based on our positive outlook to the sector, to raise (top-quality capital reserves) to 12 percent by 2015,” he said.
Salameh also said that Lebanese banks operating abroad do not have high credit exposure in the markets overseas. He said that the exposure of banks operating overseas is subject to the same standards followed by domestic banks.
Date Posted: Dec 08, 2011