A leading economic sector in Lebanon : Banks & Insurance sector
|Lebanon was often called the Switzerland
of the Middle East, mainly because of its well-reputed banking network that was
built up between the end of the first world war and the beginning of the civil
war in the mid-seventies. The power of the Banking sector in Beirut drew in most
of the Arab capital from the Gulf, later proving its ability to manage funds from
This became a true tradition, forming the cornerstone of the image of Lebanon’s
Despite more than 15 years of war, and although Beirut lost a part of its market
share in the area, its reputation remains. Since the 90's, the banking sector
has been playing a significant role in the recovery of the economy. Major foreign
banks and brokers have been progressively returning to Lebanon since, and the
banks are often quoted as an example and a model towards other economic sectors
at the level of modernisation and restructuring. This has mainly been done through
a program of successive centralisation in order to attain the critical competitive
size on the international financial scene.
Banks in Lebanon mainly play the traditional role of society's financial go
between. They play this role in an open and liberal financial market that encourages
competition. 69 Banks are registered at the National Bank of Lebanon/Banque du
Liban; With 62 active commercial banks and 7 specialised medium and long term
credit banks, the Lebanese Banking sector currently employs about 15,000 individuals
in 780 branches
conveniently spread throughout the country, and manages more than USD 45.7 billion
in assets nation-wide.
Foreign representation is significant, whether through foreign banks maintaining
their branches in Lebanon or equity stakes in several local banks. Lebanese banks
recognise that they are both a part of society and have responsibility towards
society. Their social practices and initiatives reflect this understanding. Most
banks have a code of ethics that stresses customer satisfaction, confidentiality
in dealing, fairness and integrity. Banks are very involved in their local community
through the sponsorship of cultural activities and social events.
Lebanese banks are working hard to fight financial crime. In addition to their
efforts in training their employees, introducing tight internal procedures, and
cooperating with government agencies, banks in Lebanon also signed a convention
on due diligence to combat money laundering of illegal drug-trade funds.
||The Lebanese Banking Industry was capable of sustaining
a long destructive war and flourished in time of peace to become the banking centre
of the region. It is currently being rebuilt in order to regain a leading place
on the regional and international markets.
At present, this industry is best described as financially sound, stable, and
playing a key role in an economy where banks continue to dominate the financial
system of the country in an open and liberal market economy that promotes competition.
Since the 1950's, the country has been practicing a liberal financial policy,
which conforms to the GATS agreement. All banks are aware that the milestones
achieved in the last few years only represent the early stages of our journey,
in which the focus is on creating the foundation for us to build on. Challenges
still lie ahead. However, with challenges come opportunities.
Banks, like other financial institutions in Lebanon, fall under the jurisdiction
of the Bank of Lebanon (the country's central bank). The Bank of Lebanon controls
entry into the banking industry and defines the scope of banking activities. It
sets prudential regulations and codes of practice for banks. The Banking Control
Commission, established in 1967, is responsible for supervising banking activities
and ensuring compliance with the various rules and regulations. Overall banking
activities are subject to both the Code of Commerce (1942) and the Code of Money
and Credit (1963). Without a doubt, both the Banking and Insurance sectors play
a major role in the recovery of Lebanon, and in the trust any Lebanese citizen
or foreign investor can have in the sound and prosperous future of the country.
Jean Marie Druart