Hedge fund, PE executive runs for Lebanese currency chief

(Bloomberg) – A private equity expert and a senior lawyer and hedge fund manager are running to become governor of the Lebanon Central Bank, a key appointment needed to repair the troubled banking industry and its multibillion-dollar deficit.

This is the first change of the Central Bank’s guards at the Central Bank after Riad Salameh’s four term term between 1993 and 2023. During this period, Salameh has been a constant among many of the country’s prosperity, while central banks are the basis for financial stability. Everything changed when Lebanon fell into a financial crisis in 2019.

Read: Want: Central Bank Head brings Lebanon back to the edge

According to people familiar with the deliberations, the current shortlist for nominees – still in progress – includes former minister Camille Abousleiman, a senior lawyer for DeChert LLP; Firas Abi-Nassif, founding partner at Teleios Capital Partners; Karim Souaid, founder of Growth Gate Partners, said. Finance Minister Yassine Jaber, whose mission is to present a name or a list for cabinet approval, said he would appoint the governor this month.

The people said the former IMF director Jihad is also considered a favorite of some politicians because the nomination process is not public and he therefore declined to be named. Abousleiman, Abi Nassif and Souaid declined to comment on their potential nominations. Azour did not respond to a request for comment.

Jaber told Asharq Business last week that the new governor “needs to have a good reputation, long-term experience and have history in the financial and monetary fields.”

Although the central bank under Salameh maintained the nails of the dollar and helped the government fund the government, the International Monetary Fund described some of its policies as unconventional and risky, especially so-called financial engineering, aimed at promoting foreign currency reserves.

Through complex swaps between central banks and local lenders, billions of dollars in depositors are funded to cover the government’s deficit and fund nails. The new governor will have to cover the loophole in the central bank’s balance sheet and try to return billions of dollars in deposits as part of a broader economic recovery plan.

Salameh repeatedly defended his policies, which had caused a large extent of crisis, saying he was just spending time reforming for politicians.

A political shift this year is unlikely after a devastating war between Israel and Hezbollah, which is based in Lebanon and backed by Iran, where lawmakers overcome years of disagreement to appoint a president, prime minister and a new cabinet.

Since January 1, the country has facilitated 37% of the rallies in the country’s defaulted bonds, up more than 114% in 2024, with most of them occurring after a ceasefire between Israel and Hezbollah in November.

The new governor also needs to evaluate the balance sheets of commercial banks to restructure or consolidate some of the country’s 44 lenders. Since 2019, deposit losses have forced banks to stop lending and impose de facto capital controls on the US dollar withdrawal.

Previous governments have recommended banks need to cough billions of dollars to repay their customers, and lenders insist that recycling deposits should be the only responsibility of the state.

Next, the authorities need to hold talks on bondholders on defaulted debts. The central bank holds $5 billion in European banks, while Lebanese lenders hold another $3 billion, down from about $15 billion at the beginning of the crisis.

Lebanon defaulted in 2020 on international bonds at the top of its financial collapse, when inflows began to decrease and confidence in the ability to repay debts.

– Assisted with Nicolas Parasie and Youssef Diab.

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