M1 upping the stake in Sainsbury’s
Investment fund M1 group, owned by Prime Minister Najib Mikati and his brother, Taha, raised its share to just over 3 percent in J Sainsbury, owner of the third-largest chain of British supermarkets, the level at which it needs to be declared to the stock market in the United Kingdom. At the current market capitalization of $8.9 billion (as of March 15), the Mikatis’ stake is worth $265 million. The interest in the British retailer is ostensibly due to its significant property portfolio valued at $17 billion at of the end of 2011, almost twice the size of its market capitalization. Sainsbury’s largest shareholder remains the Qatar Investment Authority sovereign wealth fund, with a 26 percent stake. Despite withdrawing a £10.3 billion bid ($20.6 billion at the time of the offer) to acquire the entire company in 2007 due to shaky credit markets, speculation still lingers that the Qataris could renew a bid in the future.
SWIFT to cut Iranian bank ties
The European Union is banning all financial transactions with blacklisted Iranian financial firms, which include Iran’s central bank and more than a dozen financial institutions. Belgium-based Society for Worldwide Interbank Financial Telecommunication (SWIFT), which operates a financial messaging network linking most of the world’s major banks, is abiding by the EU’s ban. Nineteen banks and 25 financial institutions from Iran are being blocked from using SWIFT. The United States is pressuring for more action, as their policy makers are demanding an end to financial transactions with all firms and not just selected ones. The US is threatening penalties against SWIFT, arguing that Iran could shift financing for its nuclear program from the sanctioned financial firms to other firms. The US, which has blacklisted 23 Iranian banks, believes that Tehran is using more than 20 banks to finance its nuclear program and assist militant regional groups. Lebanese officials and banks confirmed to David Cohen, the US Treasury Undersecretary for Terrorism and Financial Intelligence, that Lebanon is complying with the financials sanctions imposed to Syria and Iran. With increasing pressure from Western sanctions and with a rising demand for dollars, Iran’s central bank lifted its strict foreign exchange policy, which was imposed in January this year, allowing money traders to exchange dollars at the unofficial rate as opposed to the unprofitable and artificially fixed official rate of 12,260 rials to the dollar. An illicit trading of foreign exchange had pushed the unofficial rate to around 19,000 rials to the dollar.
Lumber for La Resistance
The Democratic Republic of Congo has awarded profitable forestry concessions to Trans-M, a company owned by Lebanese businessman Ahmed Tajideen, according to a Reuters report. Tajideen also runs Congo Futur, a sawmilling factory accused by the United States federal prosecutors of being a cover for Hezbollah. It has been put under US sanctions since 2010 for being part of a network of businesses controlled by Tajideen’s three brothers, Kassim, Hussein and Ali, which generated “millions of dollars in funding” for Hezbollah. The US measures are part of a wider attempt at countering rising business activity in Africa by Hezbollah. The concessions granted by Congo’s environment ministry to Trans M consist of 25-year leases for hundreds of thousands of hectares of rainforest which, according to forestry experts, could bring hundreds of millions of dollars in revenues if they are fully exploited. Ahmed Tajideen denies his brothers’ involvement in the companies, the link between the two companies as well the accusation of being a Hezbollah front. John Sullivan, a US Treasury spokesman, recently warned that Trans M would face sanctions if Congo Futur owned a majority.
Lebanese credit worthiness drops
In a credit worthiness survey of 179 countries conducted semiannually by Institutional Investor and published in March, Lebanon ranked 105th globally, down from its 99th spot in the September 2011 survey due to local instabilities as well as political unrest in the region. Lebanon ranked 12th among the 18 countries from the Middle East and North Africa. Qatar had the highest rank among the MENA countries (20th globally) followed by United Arab Emirates (27th globally) and Kuwait (28th globally); Syria ranked 126th globally, down from 124th in September. The survey rates the creditworthiness of a country on a scale of 0 to 100, with 100 representing the least chance of credit default. Lebanon’s score stood at 32.5 points in March 2012, down 3.2 points from September’s score. Its score is below the global average of 44.3 points (excluding South Sudan with a score of 10.3 points) and is also below the MENA average of 48.2 points.
The billionaires among us
Forbes’ 2012 billionaires ranking is out and includes 1,226 names, an all time high with a combined net worth of $4.6 trillion. Mexican telecom tycoon of Lebanese origin Carlos Slim topped the list with a fortune estimated at a whopping $69 billion, followed by Microsoft’s Bill Gates with $61 billion and business magnate Warren Buffett with $44 billion. Rotation is the biggest feature this year with almost as many billionaires dropping out of the list (441) as those making it (460). From the Middle East, 33 billionaires made the list. Prince al-Waleed bin Talal, chairman of Riyadh-based Kingdom Holdings, which owns stakes in the Four Seasons Hotel, Apple, Newscorp and Citigroup, tops the Arab list with an estimated $18 billion fortune. From Lebanon, Prime Minister Najib Mikati and his brother Taha top the list with $3 billion each. They are followed by the Hariri brothers Baha ($2.5 billion), Saad ($1.7 billion), Fahd and Ayman ($1.3 billion each).
Middle East carriers up in a downwind
The International Air Transport Association (IATA) expects profits for Middle East carriers to increase this year to $500 million from $300 million in 2011, bucking the worldwide trend. Global profits for the industry are forecasted to fall by $500 million to $3 billion, mainly due to higher oil prices. “2012 continues to be a challenging year for airlines. The risk of a worsening Eurozone crisis has been replaced by an equally toxic risk: rising oil prices,” says Tony Tyler, CEO of IATA, which represents 230 airlines making up 93 percent of scheduled international traffic. With a price of oil forecast of $115 per barrel, IATA expects fuel costs to constitute 34 percent of average operating costs of airlines and total fuel costs in the overall industry to reach $213 billion. Passenger demand is expected to increase 4.2 percent this year. Asia-Pacific carriers are expected to report a profit of $2.3 billion, the largest profit by region. European carriers are expected to face the toughest conditions with a forecasted $600 million net loss this year.
Bank Audi bonanza in Turkey
Bank Audi plans on opening 50 to 60 branches in Turkey in the next few years, of which 15 will be in Istanbul according to Chief Financial Officer Freddie Baz. The bank received in October last year a license to establish a deposit bank in Turkey with a starting share capital of $300 million, the first permission of this sort by the Turkish regulator in more than a decade. Turkey has not granted any new bank licenses since 2001 when a financial crisis brought down the number of lenders in the county to 61 from 81 two years earlier. During the economic crisis of 2008, Turkey did not have to bail out any of its banks. The banking sector’s profits fell 10 percent in 2011 to $11.3 billion, with loans growing by 22 percent to $388 billion. The chairman of the Turkish Banking Regulation and Supervision Agency Tevfik Bilgin expects the profits in 2012 to be in line with 2011. He also expects new banks to enter the country this year.
