For years, the Lebanese banking industry maintained financial stability. It played a vital role in the country’s economy and was the major provider of credit for individuals and businesses in a market characterized by some competitive forces. However, the current crisis pushed banks into being bombarded, rather excessively, by systematic and critical attacks from economists, journalists, rating institutions and others, which showed despair regarding the situation of banks, though banks are not to be directly blamed for the crisis. Not to mention, the default of the government on the payment of Lebanese Eurobonds that affected negatively the banking sector as a whole. Besides, pressure intensified on the Lebanese pound and overall balance of payments in addition to the spread of the Coronavirus, all made deposits and loans at commercial banks to recoil rapidly and interest rates on savings to decline noticeably.
In this note, we address the extent of banks’ placements in the sovereign exposure, and analyze the main aspects of the banks’ balance sheet.
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