Paralyzed by financial crisis and riven with political risk, a number of Lebanon's banks are struggling to meet a central bank target to raise their capital defenses by 20% by the end of this month.
Less than half of the country's dozen or so large banks are expected to meet the requirement, which the central bank set in August to reinforce the sector, according to four banking sources with direct knowledge of the situation. Those that are on track to meet central bank targets have largely tapped existing shareholders or depositors, converting local dollar deposits into equity instruments or sold overseas businesses.
The situation underscores the scale of the problem facing Lebanon's banks, heavily exposed to one of the world's most indebted states and starved of funding. Their customers have largely been frozen out of their dollar deposits and blocked from transferring cash abroad since late 2019.