Lebanon provides a case study of a banking system which was able to quickly regain its footing and then move forward after a devastating civil war. In Lebanon’s case, the war lasted 15 years, entailed considerable physical destruction (though not on the scale being seen in Syria) and saw large-scale displacement of population.
Yet when rating Lebanese banks for Moody’s just a few years after the war had ended and stable government established, I saw institutions that were well managed, entrepreneurial, profitable and solvent.
Before the war, Lebanese banks had been privately owned and they were managed by businessmen and financiers determined to make money. True, regulation was light, scandals occurred, and corruption widespread in the economy, but it was a dynamic environment always with an eye on the future.
Bank shareholders worked hard to protect their banks during the war, and when peace returned, the system benefitted from the return of thousands of young Lebanese who had spent the war years in London, Paris or the US earning university degrees and developing a taste for high standards and good living.
Then there is the Central Bank of Lebanon. Supposedly the only institution not to be targeted during 15 years of war, but certainly one that retained its reputation and integrity, the Central Bank has been a robust regulator, requiring its banks to comply with international norms.