Banks back economy

Banks ready to support economy through private sector; not by debt refinancing: ABL chief

July 26, 2011- The president of the Association of Banks in Lebanon (ABL), Joseph Torbey, said that banks will attend to the country’s financial requirements. However, he specified that the banks are willing to support the public financial needs through the private sector rather than refinancing public debt.

“This is a crucial issue that requires legislations,” Torbey told reporters following a meeting with the Minister of Economy and Trade Nicolas Nahhas on July 25. A draft Public-Private Partnership (PPP) Law has been pending in the cabinet since April 2010.

The ABL Chief said the meeting addressed current economic files that need to be tackled by the government. He said further meetings will be held for this purpose.

According to figures of 2010, banks have lent the public sector $28 billion, which accounts for 46 percent of the total loans extended by the banks to both the private and the public sectors ($64 billion).

Local banks have expressed willingness to swap maturing Eurobonds and treasury bills, but they made it clear that they have no intention to finance new debts as this may increase the public debt and prompt rating agencies to downgrade the economy further.

Moody's Investors Service has recently changed its outlook from stable to negative on four local banks, namely Bank Audi, Blom Bank, Bank of Beirut, and Byblos Bank.