S&P: Lebanese banks face risks

Standard & Poor's said that the main impediment for Lebanese banks remains their high direct exposure to the risks inherent in operating in the Republic of Lebanon.

The ratings on Lebanon were lowered to CCC+/stable/C on Jan. 31 to reflect the current political impasse there, the agency said.

"The Lebanese government's high indebtedness, fiscal deficit and fragile political stability pose a serious threat to any bank in the system," said S&P credit analyst Paul-Henri Pruvost.

Although Lebanon has never defaulted, the banking system, which has proven highly resilient thus far, would suffer dramatically from an unwinding of public finances, the agency noted, adding that consequently, the exposure of three rated Lebanese banks, Bank Audi SAL - Audi Saradar Group, Bankmed, sal and Blom Bank sal, to sovereign risk is paramount and impinges significantly on the ratings on the banks.

These ratings are supported, however, by steady growth in business and profits, improvements in loan quality and good management, the agency added.

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