Lebanese lenders look to offset risk

18 November 2010

Banks in Lebanon are in desperate need of diversifying out of their home market to reduce risk

London’s reputation as a centre for global finance has taken a battering in the wake of the financial crisis and attempts by politicians to capitalise on popular mistrust of the financial industry through new taxation measures.

Several large international banks have made noises about how unhappy they are with the bad press they are getting in the UK, and suggestions that a barrage of new regulations limiting pay and taxing them more are on the way.

In the face of this, Lebanon’s Bank Audi is making a decision to set up in London.

The decision makes a lot of sense. Despite the problems that emerged over the past few years, London remains one the world’s top financial centres. It is a hub not just of skills, but also of clients. For the Middle East especially, London is often one of the first places that wealthy individuals look to invest in.

Lebanese banks are also in desperate need of diversifying out of their home market. They play a large role in funding the country’s budget deficit, and that leaves them overexposed to the state.

London forms just one part of an international expansion strategy that also includes markets closer to home such as Syria, Egypt, Jordan and Turkey. Byblos Bank, for example, wants to have at least 40 per cent of its assets and revenues from overseas.

That may be an aggressive target, but will be necessary to reduce the concentration of risk in their home market.

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