Few weeks after the US accused a Lebanese bank of money laundering, Salameh, who is currently in Washington, said that the recent accusations “only addressed the activities of the bank and not the entire banking sector in Lebanon.” The NNA said that Salameh met with a series of officials, including Stuart Levey, the first Under Secretary for Terrorism and Financial Intelligence within the US Department of the Treasury.
My guess is that Washington wasn’t happy with Mr. Salameh’s vigorous defense of the Lebanese Canadian Bank and forced him to reconsider his support. Notice in Mr. Salameh’s statement an admission of the LCB’s suspect activities, which is for all intents and purposes a U-turn in the governor’s position.
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Salameh is in a delicate balancing act. He needs to ensure that the banking system is free of money laundering activities.
But he needs to defend the bank, because the LCB is not a small bank. It is one of the 10 largest banks in the country, and so must have financial dealing with most other banks. If he appears too supportive of the US position, he risks a run on LCB, leading to a disorderly resolution with losses for the banking system as a whole.
LCB’s days as an independent bank are numbered. All of management and many of key officers will be gone, and it will most likely be acquired by another Lebanese bank. The important thing from Salameh’s perspective is to ensure the safety of the “clean” deposits.
If a run were to happen, it happened already. The clients who want to get away from banks with Hezbollah-related activities and money laundering activities are going to withdraw their funds, if they can. But there are people who like shady stuff, and who will think that if the bank is really guilty of laundering 200 million dollars a month, it probably has amassed quite a bit of money, and that it is quite safe. Being associated with Hezbollah inspires trust in some people, just think of the Ezzedin scandal: People gave their money to Ezzedin because they thought he was backed by Hezbollah. So I don’t think the Lebanese Canadian bank will die soon or that it will be absorbed. Anyway, in the latter case, I will steer away from the bank that will absorb it.
Mustapha, I think you’re exaggerating when you say that Salameh’s declaration is an admission of the LCB suspect activities, he just said that the accusation addressed the activities of the bank. He was neutral, but he didn’t defend the bank, he kind of backpedaled from his former strong and clear support. And that will be interpreted as accepting the accusations. I don’t know how this will affect his job security, and, more importantly, his personal security.
What I meant is that he now acknowledges the seriousness of the accusation, which is a change from his previous position..
All banks in Lebanon are more or less evil. Sadly, they are the backbone of our economy, or indeed any economy.