Arab Bank in Lebanon Price Competitive with Regional Network

For the past few years we had a different strategy to be closer to our clients and give them access to our global network and we also offer very competitive pricing compared to the other players in Lebanon.

Nadim Ghantous, GM of Arab Bank Lebanon Interview with Nadim Ghantous, Country Manager of Arab Bank

Fitch ratings in 2010 indicated low strength (D) for Lebanon’s banks.  What is your assessment of the banking sector in Lebanon and what is the outlook for 2010?

The Lebanese banking sector is highly liquid and very strong.  It is also important to keep in mind that Lebanese banks are run by families although their shares are still publicly traded.  This means that banks are managed more conservatively and with a careful approach and this has protected us from the most recent global financial crisis.  The strong liquidity comes from trust that the Lebanese diaspora and Gulf region have because they send a lot of funds to be placed in Lebanese banks.  This helps prove their confidence in the sector.  Also, the Lebanese economy has grown by 7% the past two years despite recently emerging from geo-political instability.  In 2010 I don’t think there will be much change and we are cautiously optimistic.

Do you think Lebanese banks investing in other sectors in the region will play a big role in 2010?

This started many years ago and several Lebanese banks have opened overseas and into niche markets.  They have been quite successful with this.  With the excess of liquidity I think we will see more financing of local market businesses.  Lebanon is a small country so the question is how much can you really invest here?  The Lebanese diaspora is larger outside of Lebanon and this is where we are looking to develop more globally.

Last years 5% non-deductible tax interest deposits is reported to go up to 7% and has left many bankers feeling uneasy.  What has been the effect of this legislation and is this going to impact the banking sector?

When the first 5% was applied people were a bit annoyed because they don’t like to pay  taxes but the alternatives were placing your money elsewhere for less than valuable interest rates.  The interest rates on investments in Lebanon were so high that is compensated for this tax.  If it increases to 7% the Lebanese banks are still paying high interests rates that off set this.  If people don’t like this they will either have to move their investments outside of the country or just reluctantly pay the tax. 

Do you see this tax increasing in the future?

You never know, this is something we can not predict because it is run by the government but we hope it will remain the same.

Do you think measures taken by the government have helped to tackle the challenge of debt?

The Central Bank of Lebanon have done an outstanding job in controlling the money policies in Lebanon and keeping the Lebanese pound stable.  Yes we do have debt but it is being managed very masterfully by the Ministry of Finance and the Central Bank.

The governor of the Central Bank said it intends to issue more circulars this year in order to give credit to the private sector.  How do you view this and what are the pros and cons?

This is an excellent initiative because in Lebanon we have many more small and medium sized enterprises than big enterprises and these smaller companies need to be developed.  The problem that we always face is that they can’t present their financials properly but we are trying to encourage and educate people to this as we feel it is the responsibility of the bank.

How do you assess the performance of Arab Bank in Lebanon and how do you intend to tackle the competition from other player in the market?

Arab Bank’s position in Lebanon is unique because it is a branch of a Jordanian bank.  We have been around in Lebanon since 1944 and were around even before the Central Bank and our name pristine and reflects strength and integrity.

“For the past few years we had a different

strategy to be closer to our clients and give

them access to our global network and we

also offer very competitive pricing compared

to the other players in Lebanon. ”

What remains the greatest challenge for Arab Bank in Lebanon and elsewhere?

The greatest challenge of any bank in the region is adapting to the changes in the region and the instability that comes and goes.  However, we have successfully managed this and will continue to do so.  Overall, everyday is a challenge to keep everyone satisfied and maintain one’s reputation.

How confident are you 2010 will be positive?

2010 should be stable compared to what is going on today.  For Arab Bank in Lebanon we are very optimistic because we are starting to see results from our most recently implemented strategy. 

Arab Bank has 500 branches across thirty countries and five continents.  How do you define group strategy over the next four years and has the global economic downturn had an effect on this?

Arab Bank was established with a vision to serve the Arab region and this is still the policy of the bank.  Regardless of instability the approach has been conservative from the beginning and this is embedded in the culture of the bank.  This conservatism helped saved the bank from the most recent crisis and helped us navigate through the crisis very successfully.  We have always made a point to maintain high liquidity, strong capital-adequacy ratios, and prudent credit and risk policies.

What is your final message about Lebanon?

I would welcome anyone to Lebanon.  Whoever visits Lebanon will never forget this place so let them come first as visitors to study and research the market and if they like it, why not invest in Lebanon?  This is a country of opportunity and Arab Bank is here to help.

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