ACGM CEO, Carlos Abadi Speaks at Inaugural Euromoney Lebanon Conference
New York, NY – ACGM President and CEO, Carlos Abadi spoke today at the inaugural Euromoney Lebanon Conference held at the Four Seasons Hotel in Beirut. The event attracted over 300 delegates and the opening keynote address was delivered by his Excellency Mr. Riad Salamé, Governor of the Banque du Liban.
The theme of the conference was finance and technology and Mr. Abadi sat on the morning’s first panel which examined Lebanon’s macro and financial sector outlook. He was joined by moderator Angus Blair, Chief Executive Officer of Signet Institute and fellow panelists: Marwan Barakat, Group Chief Economist and Head of Research at Bank Audi; Louis Gargour, Managing Partner and Chief Investment Officer at LNG Capital; and Alia Moubayed, Director, Senior Economist and Head of Research for MENA at Barclays.
Mr. Abadi began by acknowledging the many strengths of Lebanon’s financial system, such as scale, world-class regulation, and human capital. He also pointed out that Lebanon’s well known high debt to GDP ratio and its reliance on banking sector deposits to finance public debt, briefly touching upon the need for continued deposit growth in order to finance the government’s spending; however, the focus of his discussion was the relatively recent dollarization of Lebanon’s debt and the resulting delicate equilibrium which characterizes Lebanon’s public debt financing. Mr. Abadi raised the concern that the country could run out of dollars to finance itself as an increasing proportion of the public debt has been financed using dollar denominated instruments.
Mr. Abadi explained that in a negative case scenario, a dollar gap could emerge, resulting from a mismatch between debt denominated in dollars (public and central bank) and dollar reserves (including gold). He discussed the risk that flight of dollar deposits could lead to a default. While suggesting that this is not the most likely outcome, he cautioned that the current situation leads to an uneasy equilibrium where short-run imbalances are controlled, but the situation remains unstable, and a major geopolitical shock could trigger a default if the regional and supranational safety net (GCC, banks, OECD, and IMF) failed to meet the dollar shortage. Mr. Abadi presented two ways in which Lebanon must try to reduce the growing dollar short that the consolidated public sector has built-up: 1) gradually de-dollarize liabilities, and/or; 2) reduce financing requirements. Of these two options, he suggested that the former was the most feasible in the short-term because yields between local and dollar instruments had narrowed.
Other panels and topics of discussion at the conference included: the development of a middle-eastern technology hub in Lebanon; financing of start-ups; and capital market development. ACGM professionals have been active in Lebanon for over a decade and the country constitutes one of the firm’s focus markets. Over the years ACGM has developed close relationships with the major Lebanese banks and regulators.
The event was supported by, among others, Banque du Liban, the Capital Markets Authority, Bank Audi, Blom Bank, and Bank Med.
About Abadi & Co.
Founded in 1991, Abadi & Co. is an investment banking boutique which specializes in three core areas: emerging markets, financial institutions and restructuring & special situations. By focusing on these three areas of expertise, Abadi & Co. has built a team of independent specialists–Fluent in Finance®–who serve as powerful advocates for clients, focused on protecting their financial interests and delivering practical, high-value financial solutions. The Abadi & Co. team prides itself on its ability to guide clients through difficult and groundbreaking transactions, even in situations where the structuring complexities and challenges would have thwarted others.
Abadi & Co.’s experienced team works on a range of transactions, including mergers & acquisitions, debt & equity capital markets issues and recapitalizations. It caters to a global client base which includes companies, governments and financial institutions, across North America, Latin America, Europe and the Middle East. The firm’s specialization approach means that it only takes on engagements if they fall within one or more of its core areas of expertise, allowing it to assign a strong team to every engagement, providing clients with the attention and intellectual capital they deserve. The firm’s clients appreciate having direct access to a senior banker 24/7; they value the discretion of Abadi & Co.'s smaller team and are relieved of the conflict of interest concerns inherent in working with larger investment banks, which often look to cross-sell other products and services. In order to prevent conflicts of interest, and to ensure the independence of the firm's advice, Abadi & Co. does not conduct trading or manage investments.
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