E: Byblos Bank today is very active in addressing new markets. What are the most important developments and what are the reasons behind them?
Three years ago, the bank set up a strategy to start focusing outside of Lebanon, because the economy of Lebanon is small and our bank is big compared to the size of the economy. Last year, we opened a bank in Sudan and have been doing very well together with our partners, the OPEC Fund and the Islamic Development Bank. Also, over one year ago, we applied for a banking license in Syria. Since the country is opening up slowly, we only got the approval to set up there in October 2004. In the meantime, we’ve been preparing ourselves, conducting training and putting systems in place to be able to open in Syria by the first quarter of 2005. Then we very recently got the approval to open a Rep Office in the United Arab Emirates. In addition to that, we have been looking very seriously for the past year at two new markets. We are working on two different countries and are still deciding in which to open a bank first. Basically, we are implementing what we set as a strategy plan a couple of years ago, in terms of expansion for risk diversification and profit stability and diversification.
E: Does this expansion connect closely to your work in Lebanon?
The base of our expertise for the regional expansion will come from Lebanon and our focus in Lebanon has always been to continuously implement best banking practices, including corporate governance and Basel II requirements. Our benchmark in terms of international best banking practices is not the Lebanese market but the EU banking community.
E: What led you to orient yourselves so explicitly on European banking standards?
The reason why it has always been our concern to benchmark with the international banking community is that we already have a presence in Europe. As we follow these best banking practices in Europe, they are not something new to us. But while we are present in Europe, our activities there are limited and very specialized, making it important to have the same best banking practices at our head office. Today, the head office here is implementing all the best banking practices in Europe. We continuously bring in consultants, on information technology, organization, audit, etc. You have to follow international banking rules if you want to be involved in international business today, to be accepted in the international community and be in the club.
E: Do you see yourself as being a role model for other Lebanese banks in this regard?
We are role models in different areas. Whenever we buy an important package or an important system other banks are interested to follow suit, because we have already done the due diligence on this product. There can also be a synergy for other banks because they could benefit from the support. I can give you an example: we acquired a core banking computer system called Globus from Temenos. It is a number one selling banking system in the world today and we are the model because we have implemented the system throughout the bank. We have become like a regional center in receiving all interested banks who visit us here to see how we have implemented it. Also for our Human Resources system, we just now signed with the suppliers of the number one HR system in the world, Peoplesoft. Other big Lebanese banks are following suit and also interested. A lot of suppliers know if they get through Byblos, others will follow.
E: How do you see your role vis-à-vis the community? What makes Byblos Bank important to the Lebanese?
Traditionally and throughout the war, banks used to lend against real security. When after the war everybody had needs to renovate their house, buy a car etc, Byblos was the first to propose long-term residential mortgage loans, car loans, and loans to small businesses. Today, we have 20% market share in the Kafalat loans, which go to small businesses at very low rates. In car loans, retail loans, and housing loans, we were the first to take the risk to create and launch these products and today still have the largest share in the market.
E: It is correct then, that Byblos is known as a bank with emphasis on the retail market?
We also built credibility with international lenders. In order to lend long-term, we needed to raise long-term funds. For example, we are the largest borrower from the IFC, the only user of a fund from the European Development Bank, and the only borrower in Lebanon from the Agence Française de Developpment; we are clients of the OPEC Fund, of the Islamic Development Bank. The credibility we built with international agencies also opened the door for these lending agencies – they asked me to go to Madrid to make a presentation on the benefits of EIB loans to Lebanon, because we have been the most active and professional in packaging and correcting the loans. What are the benefits of that for the country and our bank? When we decided to go to Sudan, a country that is emerging and needs funding, it was very easy for us to convince the OPEC Fund and Islamic Development Bank to come with us. It is a way for us to bring these regional and international financial partners with us into new countries to expand.
E: Does your outreach also extend to non-banking activities?
In terms of community involvement, we try as much as possible to attract the non-resident Lebanese, who are actually an important part of the Lebanese economy. So we have been launching products like the housing loan for expatriates. We try to bring the expatriate community back but also help the country in history, art and culture. For example, Byblos Bank co-sponsored excavations in Saida with the British Museum and sponsored a book, which traces the archeological findings of Lebanon over the last ten years.
E: Could you encapsulate your vision for Lebanon?
We have been making money in this country. In order to make more money, we have to help the country in terms of improving the standard of living. In a poorer community, we will not be making money. We cannot make money only on a limited wealthy segment. If you have a bigger middle class, you can make more money. Our bank also is not short-term oriented but long-term oriented. We have as much as possible put pressure on the government so that they would take action, because politics here have been affecting the economy and economic growth a lot. If there is no economic growth, we cannot lend more or make more money and businesses will fold. In terms of business lobbying, we have been putting pressure on the government not just to criticize them but for them to improve. I don’t know how successful we have been.
E: When Byblos decided to open in Sudan, was there a special affinity involved?
When we knew that Sudan was going to open up, we knew we could add value there because there were no foreign banks and the local banking sector is very small and under-capitalized, with little professionalism. Instead of going to Canada or America, we can add more value on Sudan and make more money. But what is very important is that in Sudan we compliment the local banking sector and do something that other banks cannot do. We are 100 % Sudanese bank under local law and want to act as a Sudanese bank, not as a Lebanese entity. Sometimes foreign banks can upset a local banking sector and we are very sensitive to these issues.
E: Does this sensitivity reflect your experiences of being a local bank in Lebanon facing the behavior of multinational banks pushing into the country?
Yes, of course. We learned from them not to repeat their mistakes. But we cannot generalize – these were not all of the foreign banks. If the foreign competition is healthy, we respect it. We have not been bothered by foreign competition as such but by certain attitudes that we would like to not have when we go to a foreign country.
E: You have grown up with Byblos Bank. How does it affect and shape you as a person to grow up with a bank? Did you want to be a banker since you were able to walk?
If you decide to do something, you got to be the best in doing it. Otherwise, don’t do it. Having been brought up in a banking environment where my maternal grandfather was also a banker helped me a lot to be interested in that field. I never thought about doing anything else.
E: How do you feel about building a banking dynasty? Is that something that you aspire to, or see your family as having done already?
I am more interested in building an institution. This is my number one priority. We know that our achievement – whether it was my grandfather, my father or myself and hopefully my children if they want to be in banking one day – is that the bank will remain. We do help to put the systems in place to make sure that the institution will continue to survive and our satisfaction is to be able to have been contributing in making it strong and not only a local institution but as a regional institution.
E: If a business wants to grow, it needs to be hungry. Byblos Bank wants to grow. Where does your hunger come from?
The hunger for always being careful and always being ahead of the others comes from looking outside, from looking at the best and the best banking practices, which we don’t have yet.
E: How do you implement leadership in your organization?
The challenge is to create an internal system that when such a crisis happens, there is a check and balance somewhere. That is why we are the only bank to have set up and independent audit committee that reports to the board of directors, not to the chairman. This external audit committee has been very active and has only been in operation for the last six months. But we even now brought in a consultant to make an audit of our audit people, to see whether they are doing a good audit. This openness has been imprinted throughout the organization by both my father and grandfather and it has become a culture.
