Banks’ new dilemma

ENAR

For years, big Lebanese banks have operated under a cushy deal: finance government debt, and be rewarded with a handsome profit. While this arrangement has been arguably necessary, it has also led to an unwarranted level of risk aversion and capital hoarding in the sector — notably harming the development of business startups, who are simultaneously in dire need of investment. Sensing this distortion, Banque du Liban issued Circular 331 in August of last year. The order sets up a facility at the central bank that subsidizes 75 percent of commercial banks’ investment in startup companies — making such deals much more appetizing to the banks. This new facility presents an opportunity that cannot be missed. It could be a huge boon to the economy by facilitating finance to companies at their earliest stages. The amount of money that could be pumped into the ecosystem — up to some $400