Lebanon’s Banking Sector Strives to Punch out Syrian Spillover

As the crisis battering Syria is still raging, the flow of bank deposits from Damascus to Beirut came as no surprise. However, economic specialists indicate that foreign deposits have now paled compared with past years, even dropping further below the threshold marked before unrest had hit Egypt and Syria.

Bank of Lebanon and local private banks have managed to preserve and protect Lebanon’s banking sector by rushing to set clear-cut instructions and adopt strict policies according to which foreign capitals can only be deposited either in Lebanese pound or Syrian Lira, rejecting therefore deposits in U.S. dollar.

As Lebanese banks expanded into Syria, Bank of Lebanon didn’t fail to set obligations, asking these banks’ subsidiaries to get financial guarantees and take precautionary measures in order to curb any potential setback.

Lebanon's banking sector has proven incomparable resiliency and steadfastness during the country's rigorous times, but it cannot survive alone, unassisted the imposed uphill battle. A new cabinet is desperately needed, not only to deal with the political and economic ripple effects of the Syrian crisis, but also with the humanitarian repercussions entailed by the growing number of Syrian refugees flooding Lebanon.