Revitalizing banking

Despite its proud regional reputation, Lebanon’s banking sector has faced a number of hurdles in the past few years. Strong regional competition, stemming from the spawning of a number of large-scale Arab banks – mainly in the Gulf – have created obstacles for a sector seeking expansion, while a high level of liquidity, a large number of small-scale, inefficient banks, and an overcapacity of banking institutions for a country of Lebanon’s size have not helped the sector. The central bank, in close conjunction with the Association of Lebanese Banks, has been working hard to overhaul the banking sector and allow it to regain its regional competitive advantages. One initiative was the unprecedented move in late February by the central bank to amend two laws – 1998’s law number 7055 and 1999’s law number 7274 – allowing Lebanese banks to lend to non-residents and invest in foreign debt securities respectively. The