No Lebanese bank at risk of bankruptcy: Salameh


January 9, 2020


No Lebanese banks are at risk of going bankrupt, Banque du Liban Gov. Riad Salameh said Thursday.

If the situation deteriorates there could be mergers or the Central Bank could take control of a stricken bank’s assets, Salameh said in a televised interview.

“But I don’t see this situation right now,” he said.

Salameh said the Lebanese lira’s peg to the U.S. dollar would continue, in order to serve the interest of the country’s economy.

The Lebanese lira, pegged to the U.S. dollar at 1,507.5 since 1997, hit LL2,400 in the black market Thursday.

The rush on the dollar exceeded the LL2,300 threshold Wednesday before the selling price jumped to LL2,400 Thursday. The buy rate Thursday was higher at LL2,470.

Asked about who controls this, Salameh said it was based on supply and demand and not under the jurisdiction of the Central Bank.

The 22-year-old peg to the U.S. dollar has been strained to near breaking point by the country’s political and banking crisis.

With the pound losing roughly a third of its official value on the black market, a devaluation has loomed increasingly large.

But Salameh continues to rule this out, insisting that the government has the means to maintain it.

In line with BDL, commercial banks still maintain the price of the dollar around LL1,507 but they refuse to disburse large amounts of dollar banknotes to their customers under the pretext that there is an acute shortage of these bills.

Bankers argue that the crisis started when depositors withdrew over $3 billion in banknotes before the outbreak of the anti-government protests in October and another $2 billion in the past three months.

Salameh said a number of events led to the current economic situation in the country. Among those he said were sanctioning of Jammal Trust Bank, which was forced to liquidate and close after being accused by the U.S. Treasury of financial transactions with Hezbollah.