BEIRUT: Central Bank Governor Riad Salameh voiced his full support Tuesday for bank consolidation in Lebanon, provided that there were no mergers or acquisitions among the country’s 11 leading lenders.

“Our policy has always been constant on that issue,” Salameh told The Daily Star over the telephone.

“We do not force banks to exit [the market] and those who want to exit, we are ready to use the law concerning the merger of banks, which is part of the prerogatives of the Central Bank in terms of filling the gaps, if any. We are still in the same opinion that the first 11 banks cannot merge among themselves.”

The 11 leading banks in Lebanon already control more than 70 percent of the market share and any consolidations among the big players could result in some kind of a monopoly in the small and competitive market, some experts argue.

Salameh said that the only known acquisition or merger this year had been Fransabank’s acquisition of Amman-based Al-Ahli bank, adding that he had not received any official request from any bank seeking to exit the market.

The governor vehemently denied some media reports that the Americans had urged him during the World Bank and International Monetary Fund meetings in Washington to reduce the number of banks operating in the country from 72 to 25 through consolidations and mergers.

“This is not true at all and no such meetings have happened. The meetings we had with the U.S. Treasury were to explain the measures we are taking to protect the integrity and transparency of our banks. We showed the seriousness that the Central Bank and the lenders are exercising in determining the legality of the funds entering to the banks,” Salameh explained.

He added that the talks with the IMF had mainly been about the Syrian refugees in Lebanon and their economic impact on the country.

Salameh also commented on the decision by the Special Investigation Commission, which was created more than 10 years ago by the government to combat money laundering and terrorist funding, to freeze the bank accounts of furniture and design company Le Cercle Hitti on suspicion of money laundering, hinting that this step had been taken after Lebanon received a request from abroad.

“There was a request that came from the previous prosecutor general Hatem Madi to investigate Le Cercle Hitti’s accounts and the investigation ran for two years. We cannot deny that there was a foreign request in this case,” he added.

The governor refused to comment on information that the cousin of Syrian president Bashar Assad, Rami Makhlouf, had used Le Cercle Hitti to channel millions of dollars under the name of the company to two Lebanese banks, adding that by law he could not talk about this subject.

The SIC sent a letter to attorney general Judge Samir Hamoud informing him of its decision to freeze the company’s accounts.

Le Cercle Hitti said it was waiting for its lawyers to issue a statement to explain their position on this case.The governor stressed that there would not be a repetition of the situation regarding the now-defunct Lebanese-Canadian Bank, which was accused by the U.S. of money laundering and terrorist funding.

Salameh also revealed that foreign investors were keen to subscribe in the next eurobond issue and were eagerly waiting for Parliament to authorize the government to tap the market for foreign-currency-denominated bonds.

“International banks are following the news to see when the Parliament will approve the law concerning new issues of the eurobonds. Some are interested to buy and some are interested to run the issues,” he added.

Salameh noted that there was no restriction or ceiling for the purchase of the eurobonds by foreigners.

The only limit for foreigners is in the subscription of Lebanese-pound-denominated treasury bills; foreigners are allowed to own 15 percent of the bills only, in order to protect the national economy.

Salameh admitted that new issues of Eurobonds and T-bills would increase the burden of the public debt in general.

He also said that the U.S. authorities were more than satisfied by the correspondence banking operations in Lebanon.

“I have met more than 30 banks in the United States and they were all satisfied from the measures adopted by the banks in Lebanon concerning strict compliance. There was no concern about the correspondence operations of Lebanese banks,” Salameh said.

Salameh also repeated that the Central Bank was ready to intervene in the market to block any attempt to increase interest rates.

“We are going to maintain the interest rates steady and there is no reason to raise them. The markets are bidding in the Lebanese pound auction in a very satisfactory manner. The Central Bank will intervene if the markets want to raise the interest rates.”

He dismissed as speculation reports that the U.S. Federal Reserve would raise interest rates in the future.

Salameh projected 5-percent growth in the banking sector this year, similar to 2013 figures, noting that the local lenders had achieved a smaller increase in profits in the first half of 2014.

He reiterated that the Lebanese banking sector had exceeded the capital adequacy ratio set by Basil III requirements.