Last Week, the Lebanese government fell after 11 ministers with Hezbollah leanings, resigned. Lebanon’s banks receive negative credit since Lebanon’s economic forecast for 2011 will fall with the Hariri government’s fall. Whether or not violence erupts, the joint factors of less economic growth together with market uncertainties would negatively affect Lebanese banks.
Lebanese banks would lose money if reduced economic activity leads to greater loan defaults. Sectors in which banks are likely to suffer losses are tourism, retail lending, real estate and construction. Larger banks are likely to have greater investments in these sectors, but are also internationally diversified, which would give them better stability. Examples of such large Lebanese banks are: Bank Audi , Blom Bank, and Byblos Bank.