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Bank of Beirut – Salim G. Sfeir (Q&A)

The chairman and general manager talks about plans to expand

by Soraya Darghous

Salim G. Sfeir has been chairman and general manager of Bank of Beirut since 1993. He spoke with Executive about Bank of Beirut’s plan to open 14 new branches — 13 in Lebanon and one in Germany.

E How will the new branches fit with your bank’s strategy?
This is a plan that we would like to accomplish within the next six months. Our objective is to get it finished as soon as possible. But I think we won’t be ready by the end of this year. We should be ready by March 2010. We are starting with seven new branches. While we’re working on the first seven branches, we’ll be working on the second round of branches. What’s difficult is not the construction of the branches themselves; what’s difficult is finding the location that fits our objective. We do not want to go into areas that are already very well served by our competition. We would like to be located in areas where we can assist those who have not yet attracted the banking system.

E In which areas will you open new branches?
Right now we’ve decided to open three branches in Beirut, three branches in the South, three branches in the Metn area and three others in the Keserwan area. Now our challenge is to find places where we could better serve the societies that are not being served by the actual banking system.

E Did you feel that there was a high demand, both inside and outside of Lebanon, for more branches?
There is a high social demand. Why should an individual travel tens of kilometers to reach the closest branch to his house? The objective is more socially oriented than anything else.

E What was the strategy of opening a new branch in Germany?
As you know, we are already present in London and it is our European hub. But we felt we need to compliment the London office by   having more [of] a presence in Europe. London will remain our hub, but London will be more efficient if it has some other locations in Europe. We started with Germany because as you know, Germany is the wealthiest European country.

E What kind of banking will the new branch in Germany focus on? What kind of clients will you be catering to?
In Europe, we are focusing mainly on trade finance. From Europe we are serving the needs of the Lebanese diaspora in the Middle East and in Africa. Usually their needs are very diversified geographically and in terms of products.

E What about the branches in Lebanon? What kind of banking services will they provide?
Our branches in Lebanon are currently focusing mainly on retail business. They are serving our corporate customers and we are focusing on serving, from the branches, our corporate customers. But in fact our market penetration and retail needs more branches than the corporates.

E How much does a new branch cost? How many people will be employed at each branch?
The cost depends on the market; the number of people within the branch depends on the market. It really depends on the population density, wherever the branch is located. For example, if you open a branch in Hamra, you need more people than if you open a branch in the mountains. The minimum that you need to open a small branch is four to five people. The maximum is the sky.

We would like the new branches to reflect the image and the objectives of the bank. As you know, our slogan at Bank of Beirut is “banking beyond borders.” By this we mean that we do our best to serve all the needs of our customers, and the borders are in fact the needs of our customers; it’s not a geographic border. The needs of our customers are so diversified that we try to equip ourselves in the best way possible to best serve the needs of these people who have entrusted Bank of Beirut.

E In your opinion, what are the top issues and concerns for Lebanese banks in 2009?
The political stability in the country. This is the top issue that concerns everybody in the financial sector. We need political stability to best serve the present needs of the country and to prepare the future for our children. I am not very versed in politics, but my concern is to see political stability in this country.
E Recently, the International Monetary Fund noted that the top priority for Lebanese banks should be dealing with the public debt. What is your take on this? Should it be a top priority?
I haven’t seen any Lebanese bankers who are concerned about the public debt. We are more concerned with the efficiency of the public sector. When we make the public sector more efficient, the debt issue will be solved.

E  At the start of the financial crisis, some analysts were worried that foreign remittances into commercial banks would be negatively affected, as many of the Lebanese diaspora were reportedly losing their jobs abroad. Now that we’re well into the second half of the year, to what extent is this true?
I have some concerns about the economists, because they are never realistic! They are always worried; the economists shouldn’t worry. They should be more optimistic than they are.

Lebanon has many resources, first and foremost is its  resourceful citizens both here and abroad. If you assess the wealth of our diaspora overseas per capita, I think we are [some] of the wealthiest people in this world, because the Lebanese are creative, ambitious and have the courage to achieve. The economists should look at the qualities of the Lebanese businessman and not worry about whether Lebanese in the diaspora are losing their jobs or not.

E What has your institution learned from the international financial crisis? How have you applied these lessons to your long-term operations?
We have learned that the financial sector has to always be very, very, very liquid. The problem that our neighboring countries had was  a lack of liquidity. They were overstretched. The banks were overstretched. But the Lebanese banking system has learned what to do, not from the crisis, but because we survived 15 years of civil war. Our wish is to continue to have the country not just survive but prosper, no matter what challenges are thrown its way.  I think we have shown we can do that given Lebanon’s peformance during the financial crisis.

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Soraya Darghous


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