Paralysed by financial crisis and riven with political risk, a number of Lebanon’s banks are struggling to meet a central bank target to raise their capital defences by 20% by the end of this month, Reuters reported. Less than half of the country’s dozen or so large banks are expected to meet the requirement, which the central bank set in August to reinforce the sector, according to four banking sources with direct knowledge of the situation. Those that are on track to meet central bank targets have largely tapped existing shareholders or depositors, converting local dollar deposits into equity instruments or sold overseas businesses. The situation underscores the scale of the problem facing Lebanon’s banks, heavily exposed to one of the world’s most indebted states and starved of funding. Their customers have largely been frozen out of their dollar deposits and blocked from transferring cash abroad since late 2019. Given the wall of losses facing the sector, some investors and economists say it’s too little too late anyway. The 20% target laid down by Riad Salameh, Lebanon’s veteran central bank governor, is equivalent to around $4 billion, he confirmed to Reuters. That is far short of the $83 billion hole in banks’ balance sheets estimated by the outgoing government last year as part of a financial rescue plan it had drawn up. A later version of the rescue plan pared back the estimated losses, forecasting a $69 billion hole in the combined balance sheets of the banks and the central bank. “They are all insolvent,” said Mike Azar, a debt finance advisor and a former lecturer in international economics at John Hopkins School of Advanced International Studies. Read more.