BEIRUT: Lebanese banks are able to absorb any shocks, a leading banker said Thursday, thanks to their liquidity and full compliance with international rules. “As a result of the financial crisis, Lebanese banks in general have proved their ability to absorb shocks and suffered less damage compared to international banks,” Joseph Torbey, president of the executive committee of the Union of the Arab Banks, said at the opening of an annual forum for the heads of risk management of Arab banks, held at the Coral Beach Hotel.
He added that due to an effective regulatory framework and best risk management practices, with the issuance of the Basel III standards, Lebanese banks had completed their path toward strong growth in their activities while raising their capital levels and improving quality beyond the minimum requirements, and even several years before the final Basel III commitment period in January 2019.
Lebanese banks “had sufficient liquidity to cope with future obstacles and any potential crises in the short term through high liquidity coverage,” Torbey said.
He also commented on the banks’ compliance with the International Financial Reporting Standards.
“As for IFRS 9, which has been mandatory since the beginning of last year, I would like to pay tribute to the role of Arab banks in general, and Lebanese in particular, which have successfully committed themselves to these new standards.
“There are many challenges. The most important of these challenges is the need to strengthen coordination among specialized units within the institutions,” Torbey said.
He added that the Basel Committee on Banking Supervision had issued a final paper containing a set of amendments to the standard approaches to the measurement and management of credit risk and operational risk, which is the final revision of Basel III, or so-called Basel IV.
“These revisions and amendments are based on reducing the gap between standard approaches and internal approaches to credit risk and imposing a new approach to calculating capital requirements to cover operational risks,” Torbey said.
He noted that the Basel committee had finalized the final amendments to the methods of calculating market risk in January this year.
“All these amendments are expected to come into effect by January 2022. I would like to point out that these amendments would put pressure on the capital of international banks in general and Lebanese in particular,” he said.
Torbey added that the amended Basel III required banks to make a commitment to recycle a large part of their profits, improve the quality of their risk-weighted assets, raise levels of hedging and adopt a more selective lending and investment policy in various domestic and international markets.
A version of this article appeared in the print edition of The Daily Star on July 05, 2019, on page 4.
