Hedge Fund, PE Executives In Running For Lebanon Monetary Chief

(Bloomberg) — A private-equity specialist along with a senior lawyer and a hedge-fund manager are in the running to become Lebanon’s central-bank governor, a critical appointment needed to fix the troubled banking sector and its multi-billion dollar deficit.

It’s the first change of guard at the central bank in more than three decades after Riad Salameh held the office for four terms between 1993 and 2023. During this period, Salameh had been a constant through the country’s many upheavals and the central bank was a bedrock of financial stability. All that changed in 2019, when Lebanon plunged into financial crisis and the exchange rate unraveled. 

READ: Wanted: Central Bank Chief to Bring Lebanon Back From the Brink

The current shortlist of nominees — still a work in progress, according to people familiar with the deliberations — includes former minister Camille Abousleiman, who is a senior lawyer at Dechert LLP; Teleios Capital Partners founding partner Firas Abi-Nassif; and Growthgate Partners founder Karim Souaid, the people familiar said. Finance Minister Yassine Jaber, whose task is to present a name or a list for cabinet to approve, has said the governor will be appointed this month. 

Former International Monetary Fund Director Jihad Azour was also cited as a favorite among some politicians, the people said, asking not to be named because the nomination process isn’t public. Abousleiman, Abi Nassif and Souaid declined to comment on their prospective nominations. Azour didn’t respond to a request for comment. 

The new governor “needs to have a good reputation, long experience, be well known and have a history in the financial and monetary field,” Jaber told Asharq Business last week.

While the central bank under Salameh maintained a peg to the US dollar and helped finance the government, the IMF described some of his policies as unconventional and risky, particularly the so-called financial engineering that was meant to boost foreign-currency reserves. 

Through complex swaps between the central bank and local lenders, billions of dollars of depositors’ money was channeled to cover the government’s deficits and to finance the peg. The new governor will have to cover this hole in the central bank’s balance sheet and try to return billions of dollars of deposits as part of a wider economic recovery plan. 

Salameh repeatedly defended himself against allegations his policies largely contributed to the crisis, saying he merely bought time for politicians to enact reforms.

Lebanon has seen an unlikely political turnaround this year after a devastating war between Israel and Hezbollah, which is based in Lebanon and backed by Iran, with lawmakers overcoming years of disagreements to appoint a president, prime minister and a new cabinet.

The progress has spurred a 37% rally in the country’s defaulted bonds since Jan. 1, on top of a 114% surge in 2024, most of which occurred after a ceasefire between Israel and Hezbollah in November. 

The new governor will also need to assess commercial banks’ balance sheets to restructure or consolidate some of the 44 lenders in the country. Deposit losses have forced banks to halt lending and to impose de facto capital controls on dollar withdrawals since 2019. 

Previous governments have suggested banks need to cough up billions to repay their customers, while lenders insist that recovering deposits should be the sole responsibility of the state. 

Next, authorities would need to hold talks with bondholders over the defaulted debt. The central bank holds $5 billion of eurobonds and Lebanese lenders hold another $3 billion, down from about $15 billion at the start of the crisis. 

Lebanon defaulted on some $30 billion of international bonds in 2020 at the height of its financial meltdown, when inflows started dwindling and confidence in the country’s ability to repay its debt plummeted.

–With assistance from Nicolas Parasie and Youssef Diab.

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