Lebanese bankshave not always made the right choices when looking to expand internationally. Two of the most favoured countries for expansion were Syriaand Egypt. The mood towards these countries at the moment is very much one of damage control.
"The Arab Springdefinitely created problems," says Freddie Baz, chief financial officer of Bank Audi. "Last year in March we instructed our managers to stop development and taking on customers."
Syria, in particular, is an albatross around the neck of the Lebanese banking sector and the Lebanese economyin general.
The Institute of International Finance projects that the Syrian economy will shrink by 14% this year. Foreign direct investment is projected to fall to just $100 million; it stood at $1.5 billion in 2010. The conflict in Syria has been bad news and bad business for the Lebanese banks that operate there – including the country’s three largest: Bank Audi, Blom Bank and Byblos Bank.
Operating in Syria these days presents a number of extra challenges. The most serious of these are perhaps compliance with the international sanctionsimposed on the country. Sanctions came to the fore as an issue in August as it was revealed that the Assad regime planned to use Russian banks to try to avoid sanctions on oil exports and financial transactions.