BEIRUT- According to Bank Audi’s “Lebanon Weekly Monitor”, Lebanese financial markets held steady amidst the financial crisis that swept over markets around the world. At the level of commercial banks, monetary authorities remain very firm in monitoring the sector, with regulation spanning from a recent precautionary guideline on real estate lending, to the prohibition of placements in financial derivatives and mortgage backed securities. 

At the same time, the reality and history of banking in Lebanon reflects a sturdy performance throughout, as confirmed by the latest stress tests that banks overcame and as highlighted by the performance indicators; most important of which under the prevailing conditions, are liquidity indicators. Foreign currency liquidity accounts for 48% of foreign currency deposits, with 22% of this liquidity placed in banks abroad. The latter are chosen to be among the top rated financial institutions and have not been hit by the current crisis as did investment banks. 

The impact of the crisis on Lebanon remains indirect, emanating from non-Lebanese investors that liquidate their positions in order to offset losses in other markets. As such, prices slipped on the Beirut bourse and the price index dropped 3%. The impact on the Eurobond market was, likewise, limited, since it is Lebanese banks that hold the majority of traded Eurobonds (76% at midyear).