The Association of Banks in Lebanon warned in September that if Lebanese banks do not lower interest rates on all deposits, they will see profits decline and risk losses. Global interest rates are low and holding steady while Lebanese banks hold their rates close to the London Inter-bank Offering Rate. Rates of return in both Eurobonds and Treasury bills have declined.
And despite the Central Bank’s freeze on issuing certificates of deposit and the decrease in T-bills being issued from the treasury, banks are still paying high interest rates on existing deposits in Lebanese Lira. The ABL added that banks should base their interest rates on the local markets because of the potential for drastic change in global interest rates.