That’s the mentality that Riad Salameh is worried about in a comment he made this week in reference to possible mergers between Lebanon’s 11 alpha banks:
Saad Andary (central bank’s second vice-governor) was referring to a comment made by the central bank governor released on Thursday which stated that he did not want mergers between Lebanon’s top 11 banks.
“He (central bank governor) was referring to what has occurred in the international market place with the huge mega-banks that were supposed to be too big to fail,” Andary said on the sidelines of a conference.
“And you remember what happened. We saw big banks fail, so we do not want to replicate this … He is just saying this because this is a free market that he prefers not to see the top 10 or 11 banks merging,” he said. “It makes it that much more difficult for you to regulate and to manage.”
However the central bank does want to see the small and medium size banks consolidate in order to reduce significantly large number of banks operating in the country.
His comments follow on news that Moody has upgraded Lebanon’s rating on government bonds. Though I must say, MEED provides the best conclusion to the Moody upgrade not mentioned by other publications: Bonds remain in junk status.