Bank capital increase

Lebanese banks have increased their capital significantly over the last decade, as consolidated equity moved from less than $500 million in the early 1990s to slightly more than $6 billion today due to external capital increases, capital injections from existing shareholders and, above all, organic growth. Indeed, the significant profitability of Lebanese banks during the mid to late 1990s facilitated the increase in capital through internal injections of revenues. The allocation of assets to extremely high-yielding government securities – and corporate and retail lending at prohibitive rates – boosted profitability and allowed banks to increase capital without necessarily relying on external investors. This relatively easy profitability was achieved with a majority of banks not having to bother to set up efficient diversification strategies, as the government’s policy of continuously issuing debt securities meant that banks had their strategy practically decided for them. Paris II cuts off government largesse The radical