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Banks seek more deposits
Central Bank warns commercial banks against extensive foreign lending
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The Governor of the Central Bank, Riad Salameh, warned commercial banks against increasing their lending to customers in the Middle East and in Europe in light of the expected low growth rates in these regions, as well as the austerity measures needed to resolve the European debt crisis.
According to the Central Bank figures, total loans at end-2011 rose by 14 percent compared to the end of the year 2010. The banking sector’s deposits exceeded $120 billion by end-2011, rising by seven percent on an annual basis.
Salameh said that deposits at Lebanese banks abroad grew from $27 billion to $30 billion year-on-year, signifying the flow of deposits to the overseas subsidiaries of domestic banks. Thus, he called banks to avoid reducing interest rates on deposits, so as to maintain the growth in deposits, especially as local rates are becoming lower than those across the region.
Salameh also said that the Central Bank's policy on lending will maintain the current incentives but will not amend the level of exemptions on reserve requirements.
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Date Posted:
Feb 06, 2012
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