Riad Salameh, Lebanon’s central bank governor and a former Merrill Lynch banker, has always been a fan of old-school banking, and the conservative bent is paying off. In August 2004, Salameh, 58, instituted rules that prohibit Lebanese banks from investing in murky structured financial products. He also determined that banks should invest no more than 10 percent of their capital in subprime-related assets. “It is not clear what assets are backing these instruments, and it is not clear who would be the last resort in case there is a problem,” Salameh told II during a break at a conference on Lebanon’s capital markets held in New York last month. “Banks reacted negatively then, but now they are happy.”
