Lebanon appoints asset manager Karim Souaid as new central bank governor

Beirut — Lebanon on Thursday named asset manager Karim Souaid as its new central bank governor, a vital step to rebuilding the shattered economy, following deliberations that drew on US input and divided the country’s leadership.

Souaid will be expected to restructure the banking sector and fairly distribute losses from Lebanon’s 2019 financial collapse, which erased the savings of ordinary Lebanese, tanked the currency and sparked an economic crisis still felt today.

In announcing Souaid’s appointment, Prime Minister Nawaf Salam urged the new governor to focus on talks with the International Monetary Fund, restructuring banks, tightening banking secrecy laws and prioritising depositors’ rights.

“The governor, whoever he is and whatever the reservations about his selection, must commit from today to the financial policies of our reformist government,” Salam said following a cabinet vote on the appointment.

Souaid, who holds a degree from Harvard Law School and founded asset management firm GrowthGate Capital in 2007, won the support of 17 ministers in the 24-member cabinet, two sources with direct knowledge of the vote said.

Salam and President Joseph Aoun have both pledged to prioritise reforms to help secure funds desperately needed to kick-start the economy and rebuild the country following the recent war between Israel and Lebanese armed group Hezbollah.

But they were split over who to appoint as central bank governor, with Aoun backing Souaid and Salam against him, according to two Lebanese government officials, two sources familiar with the dispute and a Western diplomat.

All of the sources asked not to be named due to the sensitivity of the matter.

All the sources said Souaid was the candidate favoured by the commercial banking sector and had been helped by extensive lobbying efforts both in Lebanon and the US.

Reuters could not immediately reach Souaid for comment.

Representatives of Prime Minister Salam did not immediately respond to requests for comment. A spokesperson for Aoun did not address Reuters’ questions.

Prime Minister Salam had been seeking someone with no links to the political elite, who would be more willing to undertake necessary reforms, the sources said.

The Western diplomat and the second source familiar with the dispute said the president’s top economic adviser, Varouj Nerguizian, had endorsed Souaid. The presidential spokesperson declined to confirm this.

Nerguizian sits on the board of directors of GrowthGate, the firm Souaid founded, according to its website. Souaid’s brother, Fares, is a former MP.

“This dispute, which has effectively become public now, risks ruining the image of the duo of Salam and Aoun as turning the page on the way politics was done in the past,” the second Lebanese official said.

Triggered by widespread corruption and profligate spending by the ruling class, the financial crisis brought the banking system to a standstill, creating an estimated $72bn in losses.

The incoming governor will replace interim chief Wassim Mansouri, who has been overseeing the bank since longer-serving governor Riad Salameh’s tenure ended in disgrace in 2023 due to the financial implosion.

In the wake of the crisis, Lebanon was placed on the Financial Action Task Force’s “greylist” for failing to address concerns about terrorism financing and money laundering through its financial system.

Both issues are top concerns for Washington, which wants to prevent Hezbollah from using the Lebanese financial system and cash flows through the country to re-establish itself.

Reuters reported earlier this month that Washington was weighing in on the choice for governor, in a bid to curtail corruption and illicit funding for Hezbollah.

Reuters