Wealth manager Karim Souaid was appointed as Lebanon’s central bank governor on Thursday, filling a position that had been held by an interim chief since July 2023.
The decision was made after 17 of the 24 cabinet ministers supported Mr Souaid in a session held at the presidential palace in Baabda.
His appointment follows a weeks-long contentious battle that divided the government and tested Lebanon’s commitment to reforming its crisis-stricken economy. Mr Souaid replaces interim governor Wassim Mansouri, who had overseen the central bank since the departure of longtime chief Riad Salameh, whose 30-year tenure ended in disgrace in 2023.
The appointment of a central bank chief is critical for Lebanon as the Middle East country seeks to implement economic reforms and address the financial losses incurred since the 2019 crisis, which was further exacerbated by the year-long war between Israel and the Lebanese Iran-backed militant group Hezbollah.
Mr Souaid will play a pivotal role in managing the banking sector's restructuring and in restoring international confidence in Lebanon's financial system. He will also be expected to combat corruption and curb illicit financing for Hezbollah through the banking system.
His selection was preceded by internal disputes, sources with knowledge of the matter told The National. President Joseph Aoun backed Mr Souaid, known to have strong ties to Lebanon's banking sector, while Prime Minister Nawaf Salam opposed his nomination. It marked the first serious divergence in views over top appointments by the two men since they came to power earlier this year.
Speaking after the cabinet meeting, Mr Salam said he had "reservations" about Mr Souaid's appointment. He did not give specific details, but spoke of a "desire to protect depositors' rights and preserve the state's assets", referring to Lebanese who lost their life savings in the economic crash.
Mr Souaid "must adhere, from today, to the financial policy of our reformist government ... on negotiating a new programme with the International Monetary Fund, restructuring the banks, and presenting a comprehensive plan" to preserve depositors' rights, Mr Salam said.
Diplomatic sources noted that while the US and France refrained from endorsing a specific candidate, there was broad consensus on selecting a governor committed to implementing the reforms sought by both the Lebanese and the international community, as well as advancing an International Monetary Fund (IMF) programme aimed at addressing Lebanon’s economic crisis.
Profile: Lebanon's new central bank chief Karim Souaid faces daunting task
In April 2022, Lebanon reached a staff-level agreement with the IMF on a comprehensive economic reform programme supported by a 46-month Extended Fund Facility, proposing access to approximately $3 billion. But to unlock the IMF aid, Lebanon must implement several critical reforms that – with the Lebanese authorities accused of dragging their feet in doing so.
Mr Salam's government, installed last month, is looking to resume talks with the IMF. Earlier this month, an IMF fact-finding mission visited the country and held what it described as "productive" discussions with Lebanese officials.
Western and Arab countries have also set reforms as a condition to provide any reconstruction support to Lebanon, large swathes of which were left in ruins by Israel's military campaign last year.
Mr Souaid is the founder and managing partner of Growthgate Partners. Critics of his candidacy expressed concerns about his close ties to Lebanon's banking elite.
Other potential contenders included Samir Assaf, a businessman with close ties to French President Emmanuel Macron, IMF’s Middle East Director Jihad Azour and former Labour Minister Camille Abousleiman.
None of the rumoured candidates were regarded as positive by the Lebanese Depositors Union, a member of the union told The National after meeting with Mr Salam on Wednesday.
"Nawaf Salam has said that if Souaid wins, it’s not the end of the war. It’s a battle lost but we should continue,” said the union member. “Although I believe that if someone like him wins, it would be a significant setback, and I don’t think we will recover anytime soon.”
“We believe, first and foremost, that [the governor] should be someone clean. They don’t necessarily have to be a business-person – we’ve seen where that has led, just like with Riad Salameh – because they would ultimately treat it as a business,” added the member, noting that the governor should also oppose the use of Lebanon’s gold reserves and state assets.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
UAE currency: the story behind the money in your pockets
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Quick pearls of wisdom
Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
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Company%20profile
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Mohammed bin Zayed Majlis
'Cheb%20Khaled'
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Disability on screen
Empire — neuromuscular disease myasthenia gravis; bipolar disorder; post-traumatic stress disorder (PTSD)
Rosewood and Transparent — heart issues
24: Legacy — PTSD;
Superstore and NCIS: New Orleans — wheelchair-bound
Taken and This Is Us — cancer
Trial & Error — cognitive disorder prosopagnosia (facial blindness and dyslexia)
Grey’s Anatomy — prosthetic leg
Scorpion — obsessive compulsive disorder and anxiety
Switched at Birth — deafness
One Mississippi, Wentworth and Transparent — double mastectomy
Dragons — double amputee
