The Daily Star interviewed the president of the Association of Banks in Lebanon Salim Sfeir on his visit to Abu Dhabi where he will be part of a Lebanese delegation headed by Prime Minister Saad Hariri to attend the opening of the Lebanese-UAE Investment Conference which will start Sunday. Sfeir also commented on the economic and financial situation in Lebanon.

Q: Can you tell us about the conference you are attending in Abu Dhabi and what is its objective?

A: I was asked to go to belong to the team that is going with the prime minister, representing the bankers association. What will be my objective? My objective will be to relay where we stand as banks in this hectic period that we are going through. As a matter of fact, we as banks, are unproductive. Due to the high interest rates prevailing, we as banks are not able to push the economy forward. I am a firm believer that the role of the banking system is to strengthen our local economy and assist our customers in their financial needs, to be more productive, to be more innovative, and more competitive not only on the Lebanese market but also internationally. But the period that we are going through is crippling to any type of growth in the private sector, which is a consequence of the deficit and certainly also of the latest downgrade of the country.

Q: One of the conference’s aim is to attract investments from the UAE. Our problems are well-publicized. What will you tell the participants if you are asked there? What role can you play in encouraging investment?

A: My role is not to encourage. My role is to reflect the situation. We, as Lebanese banks, we are liquid. We have succeeded in maintaining our deposits at the same level that they were a year ago. The decrease in deposits in the banking sector is almost 1 percent which is nonsignificant. However, as I said before, with the prevailing increases in interest rates, there is no appeal from the banking sector to borrow more funds. My personal objective is to create, to enhance, to put a bridge between our banking system and the Gulf banking system for a better communication, a better understanding of the situation, and I trust we will be reflecting, in a way, the needs of our market and, in another way, the solidity of our banking system. The ultimate objective is to create, to revitalize the current flow, the previous current flow of funds that we had before between our two economies. And, encourage the investors, the Emirati investors, to be more confident when assessing the Lebanese risk.

Our banks, if you go back to a period starting in 1963, which was the year of the establishment of our Central Bank, until now, no correspondent bank has lost a penny with any Lebanese bank; no correspondent bank has had any problem with any legal issue with any Lebanese bank; no depositor has lost a penny with a Lebanese bank. We would like to emphasize the fact that our platform continues to be the same: solid, transparent, abiding to all the regulations, international regulations, and it is an opportunity now to open a new window in order to enhance and revitalize our economy.

Q: One of the key challenges, and I think this is something that would concern people outside Lebanon, is that over the past few years there have been U.S. sanctions against two banks. How do you view this and what effect would it have on the banking sector?

A: Those sanctions are political. I prefer not to discuss politics, it’s not my field. What I would like to convey is that no depositor has lost a penny in any of those two banks. Our depositors remain safe. Our correspondent banks remain safe. The parties who paid the price are the shareholders, or the management and the employees of these banks.

Q: Do you expect further sanctions on Lebanese banks?

A: I expect better days for Lebanon and for our sector.

Q: But despite the resilience and good reputation of Lebanese banks abroad, the investments in the country was not up to expectations. What do you think are the reasons behind it?

A: Our weakness is our country’s rating. If it is accepted to a certain extent by the local environment, it is not accepted by the international environment. And here I would like to convey my message to our politicians: We are not independent in Lebanon, we are part of a global market and we have to abide to the prerequisites of this international market. That means, in order to abide to an acceptable rating, to best serve our economy, to best serve our private sector, to best serve our investors, is to be in line with the prerequisites of the international agencies. The rating is global. If the banks are excellent, and the rating of the country is low, excellence is not enough. The country also has to be excellent in order for the banks to be rated excellent. I invite the public sector, the people working in the public sector, to be as excellent as we bankers are in Lebanon.

Q: How optimistic are you that our politicians will go ahead and push through these reforms?

A: I am optimistic because I have been in this field for the last 50 years, and it is the first time that I see that our politicians are aware of what they have to respect in terms of international regulations, in terms of international standards, in terms of international ratios. They are very well aware. And here I would like to address a positive note to our finance minister and our governor who are both working very hard to implement the international requests in order to upgrade the actual situation.

Q: What are the needed reforms in your opinion to cut waste and deficit?

A: The people in charge are presently aware of what they have to do. They have prepared the ground to accept the sacrifice, if we want to call it sacrifice, that each individual has to be faced with in this country. It is not a sacrifice elsewhere, but the Lebanese are being asked now to change their habits. They have to pay taxes, you cannot have all the services that you are requesting from your government if you don’t pay for these services. In each and every developed country, whoever doesn’t pay taxes is subject to criminal law, and it is criminal not to pay your dues to your government. But at the same time, the government has to pay what the tax-payer deserves - in terms of services and well-being.

Q: The conference will be held only a few days after Lebanon appears to have weathered the storm of the crunch on the dollar. Do you think that the worst is over now?

A: Let us not use superlatives in our words. This conference is opening a window. This conference is a message, and we will be very lucky to have the content and the vision of the conference have a better effect on our local base.

Q: Are you hoping you can get something out of this conference?

A: We are not asking for money. We are going to open a window of economic communication. And this window is a pledge of transparency, of resilience, and of encouragement to our brothers in the Gulf to continue coming to Lebanon in the same way that they use to in the past. The objective is not to get back with a gift.

Q: How do you foresee the future of the banking sector in light of all the current problems?

A: I have been in the field for the last 50 years. The last 50 years have proved that our banking sector is solid, resilient and safe.

Q: Do you think Gov. Salameh’s recent circular has eased the pressure on the dollar or do you think its only a temporary measure?

A: Riad Salameh is a governor. Riad Salameh is a regulator. Riad Salameh was asked to assist and facilitate the life of our importers, and he gave them a tool that would make their life easier. This is all. His job is not to give gifts. Don’t expect gifts from the governor. He was asked to supply them with foreign currency, he told them foreign currency is available under the following conditions, and the conditions given are easy conditions to abide by.