Lebanon: 70% of Deposits in USD Despite High-Interest Rates on LBP

A woman walks outside of Lebanon's Central Bank building in Beirut, Lebanon March 16, 2018. REUTERS/Mohamed Azakir
A woman walks outside of Lebanon's Central Bank building in Beirut, Lebanon March 16, 2018. REUTERS/Mohamed Azakir
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Lebanon: 70% of Deposits in USD Despite High-Interest Rates on LBP

A woman walks outside of Lebanon's Central Bank building in Beirut, Lebanon March 16, 2018. REUTERS/Mohamed Azakir
A woman walks outside of Lebanon's Central Bank building in Beirut, Lebanon March 16, 2018. REUTERS/Mohamed Azakir

Banking sector indices fell below the growth forecast for the current year, beating the effectiveness of incentives to raise interest rates by twice the average interest rates on saving deposits in Lebanese pounds and the US dollar.

Total deposits of customers (from the private and public sectors) in the Lebanese banking sector increased by 2.3% on an annual basis to reach 177.5 billion dollars at the end of October.

It has become difficult to reach a total growth rate of 4 to 5 percent during the last two months, as it was previously expected.

This indicator is a reference to measure the ability of banking resources to finance the state’s financial needs, through treasury bills in LBP and international debt securities in USD.

It was also noted that the pace of conversion from the pound to the dollar continued, as highlighted by some banking reports. Although interest rates on LBP deposits have been raised to attractive levels ranging from 10 to 15 or even 20 percent for specific offers, in addition to other conditions and incentives, banking reports showed an increased dollarization trend in private sector deposits that reached 69.5% at the end of the third quarter of this year, compared to 66.9% last year, starting with 68.72% at the beginning of the current year.

The banks’ consolidated capital accounts exceeded $20 billion in 10 months, an increase of 7.4 percent from the same period last year. This is due in particular to the banks’ recourse to strengthening their own capital to remain committed to the Basel Committee and the Central Bank of Lebanon’s criteria for capital adequacy ratios.

On the other hand, there have been signs of a decline in funding the private sector. Lebanese banks lending to the private sector (residents and nonresidents) declined by 0.89 percent, equivalent to about half a billion dollars.



Türkiye Receives Waiver for Gas Payments to Russia from Gazprombank Sanctions

A view shows a board with the logo of Gazprombank at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Gazprombank at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
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Türkiye Receives Waiver for Gas Payments to Russia from Gazprombank Sanctions

A view shows a board with the logo of Gazprombank at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Gazprombank at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo

Türkiye has received an exemption for gas payments to Russia after the United States imposed sanctions on Gazprombank, Turkish Energy Minister Alparslan Bayraktar revealed in response to a question from Reuters.

The US imposed new sanctions on Russia's Gazprombank in November, creating an obstacle for buyers of Russian gas, which had been using the bank to make payments. They have since been seeking clarification and exploring other ways to pay.

Türkiye imports almost all its gas requirement and Russia is the top supplier, providing more than 50% of the country's pipeline imports.

Ankara's pipeline gas imports from Russia stood at 21.1 bcm last year.

Türkiye had requested an exemption in discussions with US officials so that it can continue paying for Russian natural gas imports via Gazprombank.

The US on Thursday also granted a waiver to Hungary, which mainly relies on Russian oil and gas.