Pushing loans onto consumers has become the fashion among financial service providers — a fashion hardly more concerned with reason and logic than proposing the existence of prefabricated tears and holes around the knees of a new pair of jeans. But, while the latter insanity is only a serious detriment if you want to use your jeans for actual work, like laying bricks on a patio, the former can be ruinous for consumers, as banks push products that carry added risk by catering to advertising-induced, exaggerated, or otherwise non-existential needs. These products are nonetheless well embedded in the profit-seeking culture of contemporary consumerism, in Lebanon as elsewhere. But one Lebanese bank ­— specifically one that can claim to be rooted most deeply in the territory’s history, even before the founding of the Republic — is pursuing a path less trodden.

BSL Bank, which in various earlier phases of its history carried names from Ottoman Imperial Bank to Banque de Syrie et du Liban, has made waves in the market since the beginning of this year. It began by offering the unthinkable: a housing loan with an annual interest burden of practically zero percent. In spring, it followed with a personal loan that proposes an annual percentage rate (APR) of 10.62 percent. APR — which reflects real interest charges and other costs of a loan and is mandated by the central bank to appear in loan advertisements — is not an intuitive concept that lends itself to back-of-the-napkin computation by consumers, but it is easy to compare APRs under the simple rule that lower is better.

By this comparison, most personal loans in Lebanon have, in recent years, been priced at four or more percentage points above BSL’s new offering. According to BSL General Manager Elias Alouf, customers are not eligible for the loan if they are a foreigner (as per every bank in the country) or have too few zeros on their monthly paycheck (the floor for loan qualification is a monthly income equivalent to $2000 or $2,500 for the self-employed). Neither will the loan be approved if the cash is to be blown on a cruise, lavish celebration, high-priced image-boosting car, or some other conspicuous consumption extravaganza. 

At first, this array of lending conditions brings to mind a quote by 20th century American comedian Bob Hope, who famously said that “a bank was a place that will lend you money if you can prove that you don’t need it.” But, Alouf describes the BSL’s approach as a matter of practical prudence — the risks of a low earner defaulting on a loan are exponential when compared with mid-income families, he says. He portrays BSL as balanced between “agile and disciplined,” claiming that this is the bank’s strength. “Being simultaneously agile and disciplined makes a bank flexible and enables it to promote its products and services rapidly, but at the same time we will never forget the basics of banking,” he elaborates. This identity matrix appears to be topped off by classical societal principles, and perhaps, a dose of some patronizing behavior. “We really are orientating the bank toward helping the Lebanese to stay in Lebanon, buy their houses, and create their own business,” he explains.

Next, he lowers his voice to a conspiratorial whisper and apologizes in advance for uttering the “e” word. “Excuse me, this is ethical,” he says when explaining how BSL will not push its customers into borrowing for purposes of conspicuous consumption, leisure, or even the financing of big family events such as weddings and christenings. “These are things that should not be financed by banks. Bank financing is for necessities. For us, everything that is leisure, travel, etc., is not a necessity,” he says.

In his view, people should save if they want to go on a vacation, rather than overburden themselves with debt that can turn a two-week holiday into a years long commitment to loan installments. According to BSL, self-financing such enjoyments is the correct path and it will therefore always inquire of loan applicants their objectives for borrowing before deciding whether to approve the loan.

To entertain such a strategy, a lender has to be selective as well as self-restrictive, and operate on principles that at times are likely to get in the way of maximizing profit. “We don’t want to only be a profit-oriented bank,” Alouf says. “We want to contribute and help people as much as we can. When you look at the basic needs of the population, they need to buy a home, they may need a personal loan to renovate their apartment, they need to educate [their] children, insure retirement and that’s it. I will not finance a lifestyle.”

He acknowledges that this can be viewed as an attempt to change the mentality of Lebanon’s loan-happy consumers, but emphasizes that BSL does not aspire to move behavioral mountains in an instant. “We are a mid-sized bank, not one of the top banks, and we are not going to tell you that we are going to change the mentality of consumers. [But] people will always make comparisons, and they will see a bank that is not [goading] them to take loans, but instead is advising them in certain cases not to take a loan. It will have impact on the consumers, trust me. But not to a very large extent. It is a snowball effect,” he says.

[pullquote] Bank financing is for necessities. For us, everything that is leisure, travel, etc., is not a necessity [/pullquote]

Besides seeking to distinguish their lending through new retail products, Alouf and Youmna el-Khoury, business manager and head of marketing at BSL, tell Executive that the bank is preparing to roll out new digital strategies and new card services by the end of this year. “Consumers are overloaded with products and promises from everywhere. At the end of the day, if you don’t want to fight [over customers] with other banks, you need to find an innovative product for it to be accepted. By year end, BSL wants to be on par with all major banks in its product offerings,” Alouf says.

Khoury, who has banking in her blood as a member of BSL’s main shareholding family, joined the bank’s management team, at the same time as Alouf in June 2016. According to her, BSL is devoting new efforts into building both customer and employee relationships, in a process she estimates will take around three years. “We are starting today, in 2017, to acquire new clients, and we are also building on our relationships with our existing clients. We are also doing a lot of internal work to communicate with our employees and create this relationship because the best advocates of our brand are our client base and our employees,” she says.

As part of the bank’s digitization strategy, last year BSL began to invest substantially in its e-banking systems and online presence, commissioning an international provider for the development of a website that is scheduled to go live soon. Khoury envisions BSL as an interactive bank where physical branches function as digital banking nodes in which electronic knowledge of the consumer is stored. “I see it as the future where people would go into the branch — I’m not talking about eliminating the branch — and it would be a smart branch, [though] not in the sense of an automated branch as you see it today in some banks in Lebanon. When a customer steps in, the employees at the smart branch would know exactly who this customer is, if they have a loan and a need for a new car,” she explains.

Alouf admits that customers will not migrate to BSL if the bank only provides the same offerings as its many competitors in the Lebanese market. Besides rolling out a digital banking strategy and preparing new products on both the lending and savings side, he therefore aims to emphasize BSL’s historical competitive advantage: it was the first banking provider to arrive in some regions of Lebanon 70 years ago. This rootedness shows in BSL’s emphasis on what Alouf calls, “basic banking.” This stands in contrast to the recent growth strategies of some other expansionary banking franchises in the Lebanese market, which have more of a background in wealth and asset management or investment banking. Alouf concedes that BSL might consider adding asset management to its offerings later on, but plans today are to grow into the retail area on the asset and liability side. Relying on his more than 20 years of experience working with strategy, compliance, and international expansion projects at two large groups, Byblos Bank and Bank of Beirut, Alouf says that BSL is planning to pursue its growth domestically and organically, at least for the time being.

[pullquote] When a customer steps in, the employees at the smart branch would know exactly who this customer is, if they have a loan and a need for a new car [/pullquote]

In its approach to the business segment, BSL is targeting the commercial middle market of established traders and manufacturers with financing needs of up to $1 million. It aims to serve these clients within its fundamental philosophy of prioritizing the client’s best interest as understood by the bank, even if this means advising a client engrossed with the good performance of his or her business against taking a loan for expansion. “In some cases, expansion carries a danger of reducing profit instead of increasing it, and a banker who notices that a commercial client is heading in such direction has to advise a customer against taking a loan to expand,” notes Alouf.

For the branch network, BSL applies a similar approach of deliberate moderation. Arguing that the current network of 18 branches is sufficient for a proximity banking approach in Lebanon, Alouf wants to expand the bank’s workforce from a current staff of 298 to about 325. He says he will make additional hires in the medium-term only if necessitated by employee departures or substantial increases in client numbers, but is not looking to increase the network by adding new branches in the next one to two years.

According to Alouf, the bank’s performance has advanced in terms of profitability, which before 2016 was below targets and trailed behind sector averages, but has seen notable growth beginning last year and a full-year profit growth of 7 percent in 2016. However, he adds that it was only at this level because exceptional gains had been recorded in 2015. “If you remove this exceptional component from profits and compare 2015 and 2016, we had more than 60 percent increase in operating income but on the bottom line it was a 7 percent increase,” he says.

The bank seeks to expand operational profitability and has had good responses to its new housing finance and personal loan offerings, he says, and expects growth this year to be “in the high double digits,” and to achieve core profitability ratios that are on par with Lebanese Alpha banks. While BSL has a high share of independents on its board (seven out of nine board members), the bank, according to Alouf, does not currently plan to go public.

Finding yourself immersed among a gaggle of high-profile Lebanese bankers at a conference or social get-together can be a mildly frightening experience. When almost everyone in your vision is a banker or economist, what do you say to soften this phalanx of professionals? Which is the best buzzword to break the ice? The answer, personally tested in a meeting last month, is “corporate governance.” 

Dropping the term on the sidelines of a non-governance-related event at the Institute for Finance and Governance at the Ecole Superieure des Affaires (ESA) sparked an immediate conversation with a local banking consultant, who shared his experiences working in the provision of corporate governance (CG).

In the words of the World Bank Group’s International Finance Corporation, CG is “the structures and processes by which companies are directed and controlled.” Good corporate governance is important because it helps companies to operate more efficiently, mitigate risk, improve access to capital, be more accountable, and have the tools to respond to stakeholder concerns.

“Exchanges get involved in good governance work via the listing requirements they specify in order for companies to issue shares on their markets. The general idea is to protect shareholders against the information disadvantage they suffer, to be sure that management is always mindful of their best interests,” said Thomas Krantz, an activist and former chief executive of the World Federation of Exchanges. He offered this perspective on the importance of corporate governance in the context of securities exchange during a speech in late April at the American University of Beirut. The event was sponsored by the Beirut-based specialized consulting firm Capital Concept — a company chaired by Yasser Akkaoui, who is also general manager of Newsmedia, the publisher of Executive.

At the same event, five Lebanese banks signed on to a document called the Investors for Governance and Integrity (IGI) declaration. Per the declaration, they acknowledged their duty to act in the best long-term interest of their beneficiaries, stating, “We believe that corporate governance issues can affect the performance of investment portfolios,” and declaring good CG to be an essential factor “in mitigating financial risks and protecting shareholders’ rights.” With the signatures of the five new banks, the number of IGI signatories has doubled to ten, comprising seven local banks, two investment funds/firms and one regional association that represents 27 private equity firms. 

Rising standards 

Discussion of corporate governance has been on the rise in Lebanon. For several years before the April event, improved CG was trail blazed by some of the few banks listed on the Beirut Stock Exchange, along with eager consultants and the central bank. Adding to the sense that this is a timely and important issue for Lebanese banks was the arrival of corporate governance training for bank board members instigated last year by the central bank and accolades for a Lebanese bank’s CG in a London-based magazine. 

Moreover, recent ratings of Beirut Stock Exchange-listed companies show marked improvement in CG scores. The Governance and Integrity Ratings (GIR), issued by Capital Concept, saw ratings for six of ten listed stocks improve compared with a ratings exercise done two years ago. Except for marginal improvement by cement manufacturer Holcim, all the listed companies with an improved rating were banks. Three advanced by leaps and bounds (though the prior scores of all three were in the insufficient or outright failed range) and two others improved within their grade or by one notch. Of the four listed companies which did not, or barely, improved in the ratings, one is a bank, one a real estate developer ,and two are categorized as manufacturers or traders. 

Banks BLC, BEMO, and Bank of Beirut (BoB) saw the strongest improvement. As the top gainers, BoB and BEMO each jumped 50 points. BoB moved from a grade of F to a B-, and BEMO from a D- to B+ on the grade scale, which entails a total of five grades and 12 sub-grades. The third best improvement belonged to BLC, which added 31 points to its score and moved from an F to a C grade. Small gains from higher bases were achieved by Byblos Bank (three points, unchanged C+ grade) and BLOM Bank, which had an 11 point improvement and rose from a B+ to an A- grade, the highest of all listed companies. Two other listed companies of importance, Solidere and Bank Audi, seem not to have sought any improvement in their GIR scores. Bank Audi, given a B- grade under Capital Concept’s GIR methodology in 2015, received a minimally improved score and unchaged grade in 2017, and Solidere’s ranking, a D+, was likewise unchanged.

While the short history of the GIR ratings exercise does not constitute sufficient material to talk about trends or confirm sustainable increases in the corporate governance of Lebanese banks, it is notable that the average scores of banks shot up from less than 40 to 63 points, an increase of over 60 percent, to qualify for a B- grade.

Committing to better CG

The IGI signatories include publicly traded as well as unlisted banks. In the latter group are, in order of their signing, First National Bank, Jammal Trust Bank, BBAC Bank, Al-Mawarid Bank and FFA Private Bank. The listed signatories are BLOM and BEMO, the former having been the first bank to sign the IGI declaration and the latter a signatory from April 2017.

BLOM Bank issued a written statement about its CG commitments to Executive last month, just prior to the announcement of the 2017 GIR ratings by Capital Concept’s Akkaoui. In it, the bank said that it “continues to build on its strong corporate governance foundations.” CG measures mentioned in its statement included an update of its Corporate Governance Code in 2016 and several independent board members attending a training session on “Board Level Corporate Governance in Banks,” conducted in fall 2016 at ESA by Nestor Associates, a London-based CG consultancy. The training was held at the initiative of Banque du Liban, Lebanon’s central bank. BLOM added that more executive and independent board members are scheduled to attend similar training in 2017.

In a further note of interest for Lebanese CG practices, a London-based online publication and magazine called Ethical Boardroom declared its 2017 corporate governance winners for the Middle East in eight industry categories last month. Besides seven companies based in the Gulf region — the likes of SABIC, ZAIN, DP World and ALBA were among the winners — the awards contest declared one Lebanese bank to be the regional corporate governance champ in the financial services category: Bank Audi.

Independent and partisan sources both tell Executive that the process of organizing CG training for the board members of Lebanese banks was, and possibly still is, not without its opaque moments. At the same time it seems undeniable that CG standards at Lebanese banks — and, hopefully at other privately held or listed companies — are moving forward.

As CG advocate Krantz emphasized at the close of his Beirut speech, even regulated public markets are human endeavors, and as such are vulnerable to poor or improper behavior. “We simple humans need guidance in the form of regulation,” he said — which in a moderately better world is exactly what corporate governance is all about.

Banking is such a constant in Lebanese existence that you can pretty much set your watch by its heartbeat. Of course this only looks effortless. In reality, there are a series of arduous and vital balancing acts in progress, primarily at the central bank and then one tier lower at the commercial banks. After all, the sector’s steady performance in the safe annual growth of assets and deposits is entwined with global realities of the most fragile political, monetary and economic sorts. This inconvenient and undeniable reality was underscored by the months-long hullabaloo over Banque du Liban (BDL) Governor Riad Salameh’s term extension, announced at the end of May. 

Another bone of contention is profitability and its implications. In 2015, there were questions over the banks’ taxation, in 2016 a moral legitimacy debate over the benefits that banks gained from the central bank’s financial engineering, and in 2017, again, the dispute over the proper role of banks in the financing of the national budget by way of the taxes they pay. This is not to mention earlier incarnations of the question over the banking sector’s role in the financing or exploitation of what can hardly be described as smart frugality in the Lebanese public administration.

For 25 years banks have fluctuated between rentier-economy style gains in the case of their profits from high-interest paying treasury bills in the 1990s, and their burdens, such as the zero-coupon bonds of 2002/2003 (issued in the wake of the Paris II donor conference), and the more recent debates mentioned above. Without going into any of these issues and regurgitating the many valid questions related to our peculiar financial market, one is inclined to conclude that the concentration of risks — both upside and downside ones — in the banking segment is a perennial feature of post-Taif Lebanon.

[pullquote] Of varied societal functions, banking sector employment is the weightiest one [/pullquote]

The industry’s hidden values

Besides its two main contributions to the national economy — the financing of our public and private sector deficits — there are additional facets to Lebanese banking and its role in society. These facets are varied as banks’ enhancement of consumer lifestyles, sponsorship of events, their charitable contributions, their sponsorship of Lebanese art and their role as job creators and employers. Of these societal functions, banking sector employment is the weightiest one, constituting an important structural pillar of national employee incomes and of the labor market.

The dimensions of the employment pillar are not very obvious, and indeed the labor market in its entirety is shrouded in a fog of data insecurity,  further obscured by partisan international lighthouses. Multilateral agencies and initiatives with their development agendas may illuminate the local labor market’s myriad problems and inefficiencies, but rarely offer any practical way forward. In recent years, internationally driven reports have highlighted high inequality in private sector income distribution, the statistically shrinking productivity of workers, rampant youth unemployment, the absence or inefficiency of social safety nets, and lower female participation in the national workforce.

Realistic hopes are hard to build from these reports, whether for regional job prospects or for Lebanon. For example, a 2015 report produced by the International Labour Organization’s (ILO) local office suggests (based on conclusions from somewhat questionable data on negative growth of productivity since 2000) that “types  of  employment  available  in  Lebanon  over the  past  two  decades  have  been,  on  average, of relatively low productivity, usually indicative of low-quality, low-paying jobs in informal activities.”

Two reports from 2017 are worth noting. First, the United Nations’ World Economic Situation and Prospects 2017 report, published in January and updated last month, stated that the recent weakening of Arab labor markets in the Gulf countries had negative impacts on employment prospects for regional job seekers. The report highlighted that, “armed conflicts have caused large-scale unemployment in Iraq, the Syrian Arab Republic and Yemen, and some negative spillover effects have been observed in the labor markets of Jordan, Lebanon and Turkey.” In conclusion, the UN claimed that “the labor market situation in the region is not expected to improve significantly in the next two years, with structural unemployment remaining high, particularly among youth, and a widespread lack of decent work.”

[pullquote] Data research by LinkedIn from the past five years showed top regional growth in numbers of entrepreneurs and only single-digit increases in finance and banking workforces [/pullquote]

The second report, issued last month by the World Economic Forum (WEF) in collaboration with the social network LinkedIn, struck the same alarm bell on insufficient job generation, but added a new tone, referring to the “creative disruption triggered by the Fourth Industrial Revolution.” The report — published under the title, The Future of Jobs and Skills in the Middle East and North Africa — raised the notion that the impact of the Fourth Industrial Revolution “will interact with a range of additional socio-economic and demographic factors affecting the region,” creating what was labeled as challenge and opportunity for the MENA region’s workforce.

According to the WEF, data research by LinkedIn from the past five years showed top regional growth in the numbers of entrepreneurs but only single-digit increases in the finance and banking workforces. While the report offers the usual abundance of wise words and recommendations, adorned with statistics from MENA countries, it lacks useful labor statistics on Lebanon.    

Against this weary background, it is quite a different microeconomic picture that emerges when one examines employment data from the Lebanese banking sector. Granted, the banks’ collective productivity is attributable to only about 26,000 banking sector employees. This is only a fraction of the economically active population of circa 2.1 million, as estimated in 2009 by the Central Administration for Statistics, with more than 1.4 million formally employed and another 0.6 million in the informal economy.

If we consider that every high-quality job in Lebanon is an asset to the national fabric, and every newly created job of this sort expands that fabric — then the contribution of banks to the sphere of labor is impressive. The direct and indirect employment bill that comprises the salaries, allowances and social contributions paid by Lebanese banks totals some LL 1.8 trillion ($1.2 billion), equivalent to 2.5 percent of the GDP (2015 figures). According to the Association of Banks in Lebanon (ABL), the salary portion of this total reached 62.5 percent and the total cost paid by banks per average employee is LL 72.87 million (over $48,300) in 2015.   

Similarly, net job creation in the banking sector, which has stood at about 800 new hires per year for the last few years, can rightly be regarded as insufficient when compared with the estimated need for supplying university graduates with quality work — but it can also be taken as a blessing, especially when one considers that the banks’ gross hiring activity of fresh graduates is likely not limited to this net increase, but closer to absorbing 2,000 job seekers with bachelor’s degrees.

Gross hiring figures are not captured in the ABL annual report, but three of the largest banks tell Executive about their gross to net hiring ratios. “As banks we are doing our share of creating [employment] opportunities in the market. If I look at the past three to four years, the gross hiring at Bank Audi is more than 1,150. This is not a small amount,” says Nayiri Manoukian, head of human resources at Bank Audi Group. According to her, the group’s workforce in Lebanon comprises about 3,400 individuals; Manoukian explains that in 2016 alone, new hiring reached around 360, against perhaps 150 out migrations, leaving a net of 210 in added human capital.

At BLOM Bank Group, Head of Human Resources Pierre Abou Ezze says, “In terms of employment we have been growing at about 125 to 150 employees per year for the last five or six years at least, and we are anticipating that this trend will continue.” He adds that the bank hires about 250 new employees per year, in part to balance attrition of the workforce, and in part to satisfy demand for business development. “Our strategy is to aim for stable growth in operations, in terms of opening branches as well as in terms of developing business through existing branches,” he explains.

While the headcount at Byblos Bank was kept relatively constant in the first three years of the decade, new hiring has grown since 2014. “We hired around 100 people in 2014, then 134 persons in 2015, and 189 in 2016. In 2017 to date, we have hired 87, and expect for the full year to reach up to 200 new hires. This is new hires, not net growth of the workforce,” says Fadi Hayek, head of human resources. He puts the bank’s total employee turnover at around 6 percent per year, indicating that about 100-110 of its total national workforce of nearly 2,000 leave the bank per year. This number mainly includes job migrations, people retiring and a very small number of dismissals. “The net effect of hiring in 2015, in terms of human capital, was an increase of 25; in 2016 it was 84; in 2017 [we are] also expecting around 80 to 100,” he states.

Between them, these three large banks have about 7,500 employees in Lebanon, or very close to 30 percent of the total banking sector workforce. Although this number is not large in comparison with the national needs for employment generation, the role of banks in job creation gains even more weight when seen in the dimensions of empowering continued education of employees, developing career and social plans, as well as providing potential model functions to other corporate and institutional stakeholders in the labor market.

The human dimension

Workforce expansion strategies vary substantially from bank to bank. Hiring is correlated firstly to the addition of new branches, but also linked to adding and strengthening departments with new focuses, such as digitization or growth into SME and retail banking. Departments and specializations that saw disproportionately large additions of human capital, in the years since 2012, are compliance and control.

HR managers at the largest banks, and at some smaller ones, tell Executive of areas under their purview where automation is subduing the need for workforce expansion, such as in back office, archival and basic administrative roles. Overall, however, they confirm that banking jobs are safe, and that the increasing headcounts and creation of new positions has progressed hand-in-hand with the consistent increases in the assets, deposits and loan portfolios of Lebanese banks.

While it is mainly anecdotal information that fresh Lebanese university graduates and job seekers regard banking as a top employment choice — a survey this spring claimed to have found that 36 percent of respondents see banking as the most attractive industry for fresh graduates and that 39 percent see it as having the highest job security, but gave no information on sample size and methodology. Rabih Joumaa, head of the HR division at Banque Misr Liban (BML) says that he  would not be surprised by such findings. This is because in this country, where a great hunger for stability exists, banking is “the only industry that has been stable for many years,” he says.

Job security is indeed closely related to the issue of stability. Although the hospitality industry may have demand for several thousand extra workers at the start of a promising summer season, and the construction industry may hunt after new staff when the economy is on the upswing, these industries are also notorious for seasonality and layoffs during difficult times. By contrast, the statistics at individual banks point to slower hiring during some years but not to the kind of employee volatility found in many sectors that have greater demand for labor.

Historic shifts in the profiles of work at Lebanese banks commenced in the 1990s and were spearheaded by the larger banks. Under the adverse conditions of the Lebanese Civil War, academic qualifications for work in banks became a lesser concern than street smarts in facing daily challenges, such as safely making it home from the office, remembers BLOM’s Abou Ezze. At banks like BLOM and Audi the post-conflict period was the time when senior management embarked on upgrading their staff by looking for skilled knowledgeable workers, with at least a bachelor’s

degree, or even by taking in small cohorts of MBA holders. “When I was hired as a consultant [in 1995], it was the aim to introduce academic elements to training programs at the bank. The nineties saw [the] start of [an] era of human resources in Lebanese banks. That is when banks started to take care of their human capital element,” Abou Ezze explains. Today of course, a bachelor’s degree is the minimum entry requirement that bank recruiters posit.

Merits rule

Meritocracy is not what is usually associated with pathways of social advancement in Lebanon, but the principles of quality hiring and merit-based pay are emphasized by the banks, as opposed to assumptions that only elusive personal connections or specific communal allegiances open doors in bank employment. In the experience of some HR experts, such latter assumptions have, in recent years, gained even more traction among young job seekers. This is a problem, because as self-perpetuating misperceptions they can easily turn into artificial inner barriers that discourage people from applying. “The process of recruitment in the top ten banks is very developed. Banks have specific means that they use to recruit the best in the market through job fairs, internships, etcetra. They are making efforts so that the recruitment process is as accurate and objective as possible,” says Bassam Nammour, training and development manager at Credit Libanais.     

Rather than expecting ulterior motives in how banks recruit and promote their people, career-minded graduates, according to BML’s Joumaa, should be patient. “People should accept the idea [that they must] work hard, prove themselves and make effort in order to grow. It is not enough if fresh graduates would just do the minimum that is required in their job but expect quick promotions to become managers and immediately get what others got after 10 or 15 years of hard work,” he explains. 

Enmeshed with the issue of merit based promotion is the ever-thorny question of gender biases and gender-based pay gaps. Here the tenor of human resource specialists in the banks is uniform — discrimination based purely on gender terms is not an issue.

Women rising

Byblos’ Hayek states it categorically: “You will not find gender-based pay gaps in Lebanon in banks. In comparable positions such as among assistant branch managers or personal bankers, you find women earning more than men and vice-versa. Salaries depend on position and performance.” When doing an analysis of gender splits in different branches of Byblos Bank, such as rural versus urban locations or branches in regions with presumably more traditional views on the role of females, he found the reality ran opposite to common assumptions. According to him, several branch manager positions in places that are religiously conservative were in fact filled by women, and the gender mix in urban and rural branches was the same. 

“We never look whether it is a male or female when we promote anyone,” confirms Audi’s Manoukian. She points out that the rise of female employees is more than a passing phenomenon and today extends, if not yet to the very top of hierarchies, certainly to high echelons in the largest Lebanese bank. “We have a good number of females as middle managers and heads of departments. When it comes to branch managers, we are looking for males, as most [branch managers] are females,” she says. 

BLOM’s Abou Ezze says that the bank has, of late, seen a largely stable ratio of 51 percent female and 49 percent male employees in the strata of professional banking jobs (excluding clerical workers and manual laborers). “The ratio has not changed much in last few years. Twenty years ago the male workforce was dominating, but today female education levels and participation in workforce in Lebanon are higher. Families in Lebanon have need for both parents to work,” he concludes.

“In BML today, you can see that most branch managers are ladies, and if you want to headhunt a qualified one, you have to pay her what she deserves. I don’t see that pay based on gender is the case at all in the Lebanese banking sector today. Pay is based on knowhow, qualification and the market, which in my opinion today does not differentiate between men and women,” chimes in BML’s Joumaa. He adds that the bank also takes a positive view on future moms in the workplace. “We don’t mind at all to hire a pregnant woman. We had three cases in 2016/17 [of hiring pregnant women] where we were convinced that those ladies are very qualified and will provide extreme added value to the bank,” he says.

Staying realistic

It would still be presumptuous to claim that there are no glass ceilings, unjust promotions, communal biases or any sort of wasta or family-driven distortions in the composition of the banking sector’s workforce. This starts at the recruitment phase. HR managers on the one hand describe ideal recruitment practices as regarding applicants as unique individuals, and anonymizing bias-prone information such as the name of the university where an applicant earned his degree, but from the conversations with Executive it appears that it is a dominant practice to discriminate in favor of applicants from “reputed universities,” which in Lebanon firstly includes American University of Beirut (AUB), Lebanese American University (LAU), Ecole Superieure des Affaires (ESA) and Université Saint-Joseph (USJ). Upon further questioning, most HR heads confirm that their preferred lists include a variety of additional universities — especially praising the technical skills of graduates from the Lebanese University — but also caution that the high number of officially licensed tertiary education institutions in Lebanon does entail a portion of universitary entities whose teaching ability and program quality they doubt. 

In terms of career equality and job stresses, equality of opportunity and merit-based pay do not exclude differences in willingness to get ahead, nor do they provide female employees with the means to compensate for periods in which they may

focus on childbirth or child rearing. Simply said, gender pay gaps are a reality in Lebanon and likely will be for the foreseeable future. But as far as banking is concerned they are not based on the undervaluation of women’s contributions in the workplace.

As far as work-life balance is concerned, working in a bank is no easy job, and stresses — such as pressures to meet targets and produce sales results that will boost their bonuses — come to bear on all employees. According to BLOM’s Abou Ezze, work-life balance is a nice concept but he agrees that it is not fully compatible with ambitious career-mindedness. He says average work time per employee is 40 to 42 hours per week and admits that changes in working hours several years ago caused some employees to resign or opt for a transfer to the head office, where time flexibility is greater than in branches.

Average employees will not be pressured to put in extra work, but others have to make choices. “If you want to advance in your career and one day be part of top management, you have to put in more than the rest,” Abou Ezze confirms. This also results in proportionally greater male participation in BLOM’s program for high achievers,  as  younger women might find themselves unable to meet the program’s extensive time requirement if they want to prioritize their family for a period. He says: “People in that program are totally dedicated to their career. To differentiate yourself and justify being in that particular program, you first have to be a cut above [the rest] in your capabilities and second be a cut above in terms of commitment.” 

Also in Credit Libanais training head Nammour’s view, “Work-life balance is not about the bank being flexible, it’s about you as a person and how you can adapt to the bank’s schedule and be flexible within it.” On the other hand, this puts the onus on the bank. Rather than expecting traditional attitudes of employee loyalty, it should focus on proactively engaging employees. “The bank needs to let the employee feel engaged by providing the right environment, economic incentives and rewards, trainings, etc. If an employee is engaged, he will be more productive,” he says.

In the totality of remuneration issues — where still modest entry-level salaries are regulated by a collective agreement that is circulated in three languages by ABL and where pay scales for branch managers potentially reach into six-figure territory — and numerous career-related issues from trainings and continued education options (see story page 30), to the provision of clear career paths and employee evaluation procedures that keep up with international developments, Lebanese banks appear as trailblazers of practices that one might otherwise encounter in teaching manuals at Lebanese universities, but see rarely in such organized and coherent form in the bulk of private-sector enterprises. 

[pullquote] Work-life balance is not about the bank being flexible, it’s about you as a person and how you can adapt to the bank’s schedule [/pullquote]

Thinking beyond retirement

Moreover, the banks’ engagement extends into another socially crucial dimension — adequate pension planning. “Bank Audi feels that it is part of its civil duty to help its employees after retirement,” says Manoukian. Although the current number of retiring Audi employees is still very low, planning for retirees is on top of her department’s to-do list. She explains that since the beginning of 2017, the bank has been working on a retirement and pension plan, in a collaboration between the HR department and the bank’s finance and organization divisions, and has also worked with an actuarial company for this project. “We have committed that by the middle of this year we should produce a proper proposal that can be presented to the bank’s executive [board] committee to see if it will be adopted.”

While she concedes that at some point in the future pension provisions might even become a legal obligation, she notes that it doesn’t help an employer to have no proper pension scheme or old-age insurance model enacted by the state. But besides the political aspects, she sees the problem in Lebanon as cultural, citing the fact that very few people ask insurers about pension plans or annuity products. “It is really a culture where people don’t plan for the future, and this is scary,” she says.

In order to avoid pitfalls such as eventual future liabilities, Bank Audi is seeking to develop a plan for its employees which — while preserving the bank’s existing benefits offered at retirement and not affecting end-of-service NSSF indemnities – makes sure that employees will have, at the very least, the comfort of health coverage after their retirement. She acknowledges that this project will demand a strong financial commitment from the bank but refuses to provide any projection on its estimated magnitude.   

“The bank has this culture of taking care of its employees, and it was with management acceptance that we went into the pension plan [project]. Otherwise [we] would not have done it. You cannot have such a big population and productive workforce, and their retirement is not properly secured. We especially want to have the basic need of medical care  covered at age 65 and above, when one needs it,” she assures.

There are provisions in the banking sector’s Collective Labor Agreement for 2016/17 that banks have to ensure for their employees “the right of continuity of hospitalization coverage insurance” after retirement, through a program called in bureaucratese Conversion Privilege Options (CPO). Seen in combination with the other benefits that working at a bank provides in Lebanon’s unstable labor and social security environment, it is noteworthy that such initiatives are actually being implemented (Credit Libanais’ Nammour claimed that the bank recently signed such a CPO agreement for all its 1,600 staff, and was ahead in the industry in this). It should indeed send a signal to other industries that expectations of increasing productivity from employees — vital for economic success — require much more than a CEO pep talk about the “happy work family.”