Dear Guests
Ladies and Gentlemen
I take this opportunity to welcome you all again and thank those of us who brought us together this evening in this special gathering of professionals on the occasion of the 43rd ACI World Congress, Lebanon 2003 and 29th ICA Congress.
I have few words to say. I will start by mentioning that Lebanon is making impressive progress year after year in revitalizing many of its economic sectors and activities and in increasing the size and improving the competitive position of many of its financial and non financial firms to regain once again its leading role of regional center for finance, trade and tourism. The success of these efforts depends on the confidence of the private sector in the Lebanese economy and the willingness of this sector to invest in modernizing and increasing the productive capacity and efficiency of its enterprises under an adequate business environment many of its characteristics are already present.
The impressive progress applies to the Lebanese banking sector which continues in the institutional and organizational restructuring and in modernizing banking operations and integrating into the banking work the latest technology and information systems to keep banks in an advanced competitive position on the domestic and regional levels in a world of rising competition coming from globalization and market integration. This investment would help also the banking sector to continue to respond efficiently to the financing needs of the domestic economy and to provide the best services for its clients in Lebanon and abroad who are becoming more demanding with respect to high quality-low cost banking and financial services. In this respect, I would like to assert that banks in Lebanon can provide to all investors interested in our domestic markets and firms all the functions needed for an efficient, dynamic and modern banking sector playing four major roles.
The first role is a Financier as it is the major provider of credit to the Lebanese economy given its large capacity of attracting funds from the domestic, regional and international markets.
The second role is a Catalyst that incites local and international investors to get involved and invest in the Lebanese economy driven by the credibility and reputation of the Lebanese banking sector and its active engagement in extending credit to the private sector.
The third role is a Consultant as the banking sector is capable of providing to domestic and foreign investors an accurate and reliable assessment of investment opportunities in Lebanon and valuable information and analysis on the financial capacity and soundness of potential local business partners.
The fourth role is a Partner with the capital base of banks in Lebanon receptive to external capital participation being direct participation or through the acquisition of bank shares listed on the domestic and international markets.
The strong confidence in the Lebanese banking sector resides in our performance, regulation and international reputation. Banks in Lebanon performed relatively well over the last three years in terms of return on average assets and equity, liquidity, and solvency. The return on assets and equity averaged 0.8% and 12% respectively. These ratios are in line with those reported by top 100 international banks. The liquidity, measured in terms of loans to deposits, was on average close to 30% for reasons specific to the Lebanese market and the BIS based solvency ratio exceeded last year 20%. The capital adequacy ratio of the sector is much above the minimum 8% required by the Basle committee of the Bank for International Settlements (BIS) and the 12% required by the Lebanese monetary authority. A tripartite commission was established lately to start preparing for the implementation of the new Basel II Accord in Lebanon.
Over the last 3 years also, total assets of banks kept increasing at a faster rate than the GDP with the ratio of total assets of the banking sector to GDP reaching around 297% in 2002. At the end of July 2003, claims on private and public sectors reached about USD 31.4 billion out of USD 56.8 billion for total assets (around 55.3%) and the deposits of resident and non-resident private sector exceeded USD 45.7 billion. All of these figures and performance measures reflect the significant ability of banks operating in Lebanon to attract deposits from local and foreign markets. They reflect also the continuing efforts undertaken by banks to maintain and improve their soundness and competitiveness and to comply with international bank capital requirements.
The good performance of the Lebanese banking sector is made possible under best commercial banking practices and the appropriate and strong bank regulation and supervision undertaken by the Central Bank of Lebanon and the Banking Control Commission in addition to the exceptional cooperation of the Association of Banks in Lebanon with the Ministry of Finance and the Central Bank. The list of bank regulatory and legislative reforms is long and reflects the voluntary willingness of banks and the concerned authorities to restructure and modernize the banking sector and accompany the changes taking place in the international economic and financial environment.
One of these reforms is the adoption of a unified regulation for the acquisition of bank shares without any discrimination between Lebanese and non Lebanese and between residents and non residents. This regulation encourages the trading of shares in the stock exchange and introduces new financial products such as preferential shares and stock options.
The internal control at banks has been reinforced with the creation of internal audit units and the establishment of internal control regulations that are in conformity with the guidelines issued by the Basle Committee of the Bank for International Settlements (BIS). In fact much of our prudential regulations conform to the standard norms of the G10 countries.
I would like to mention finally what The Financial Stability Forum (FSF) operating within the framework of the (IMF) and the BIS concluded in its report on Lebanon that the Lebanese banking sector is stable, and insisted on the seriousness and quality of bank regulation and supervision in conformity with the international standards. This confidence is reinforced by the different credit lines from international financial institutions such as the International Financial Corporation (IFC) and the European Investment Bank (EIB) in addition to the very good performance of Lebanon Banks papers issued and listed on the international markets (Certificates of Deposits, bonds, subordinated notes and GDRs) and which exceeds U.S. Dollars. 1,2 Billion.
Once again, welcome to our country and enjoy your dinner.
Thank You
