NSSF crackdown yields results
The National Social Security Fund (NSSF) — Lebanon’s largest insurance company and the public provider of social security to the private sector — has been cracking down on evasions, an action that is apparently bearing fruit. Last month the NSSF released a statement saying that its efforts to scrutinize companies that have not registered their employees led to savings and income totaling $27 million for the fund last year, following the close monitoring of 6,233 businesses and 46,541 employees representing 12 percent of total labor force in Lebanon. Some 4,000 previously unregistered employees were enrolled in the fund last year, according to Mohamad Karaki, chairman of the NSSF, while 200 enrollments were revoked for illegally receiving benefits. In an exclusive interview, published in Executive’s September issue, Karaki said that there are now 100 auditors employed at the NSSF, up from as few as 30 the previous year.
Bank penetration 13th highest globally
Lebanon has the 13th highest penetration of commercial bank branches in the world, according to the International Monetary Fund’s (IMF) survey, which assessed branch penetration in 158 countries. With 98 branches per 1,000 square kilometers in 2011, Lebanon had a higher penetration rate than the global average of 76 branches, and more than four times higher than the average rate in upper middle-income countries, which stood at 20, and the Arab countries’ rate of 17. In fact, Lebanon has the highest branch penetration among the Arab countries surveyed. The IMF also reveals that there are 31 branches per 100,000 adults in Lebanon. As for ATMs, there are 130 per 100,000 square kilometers in Lebanon, ranking the country 17th among the 149 countries surveyed, second among the 43 upper middle-income countries and first among the Arab countries.
Qatar rebuilding in Gaza
Qatar has launched a $254 million project to rebuild Gaza, which will necessitate the cooperation of Egypt and Israel to permit the entry of building materials and machinery, currently under a partial blockade. The Qatari ambassador to the Palestinian territories, Mohamad Amadi, said that the cooperation has already been arranged and the project should begin within a few months, kicking off with the construction of a highway along the Mediterranean coastal strip. In other Qatar-related news, Egypt-based Nile Capital, an asset management firm, is launching an education fund along with the eldest son of the prime minister of Qatar, Sheikh Jabr bin Hamad al-Thani. The partnership, called Nile Capital Qatar, intends to raise $250 million to $300 million for the fund, with a first closing of $150 million expected by the first quarter of 2013. Investments will be made in projects in the Gulf Cooperation Council, the Levant and Egypt.
Iraq’s central bank governor suspended
The Iraqi government has suspended its central bank governor Sinan al-Shabibi for alleged currency manipulation. Shabibi, who took control of the central bank shortly after the 2003 United States-led invasion of Iraq, was in Tokyo for the International Monetary Fund meetings when the suspension charges were put in place. The Iraqi parliament appointed Abdelbasset Turki, the head of the board of supreme audit, as a replacement until further notice. Arrest warrants were issued for 30 people, including Shabibi, who are accused of manipulating Iraq’s dinar against the US dollar in the central bank’s foreign currency sales. To control the evasion of US sanctions by Iran and Syria leading to an increase in demand for dollars from Iraq’s central bank, tighter rules for dollar purchases were implemented. “There was huge pressure on the currency, with the difference between buying and selling increasing in the local market, affecting the mass public,” said Haider al-Abadi, a member of the investigating committee and the chairman of the parliamentary finance committee.
Lebanon to issue $1.5 billion in Eurobonds
Lebanon is raising $1.5 billion in Eurobonds at a yet undetermined interest rate, with the proceeds to be used to refinance its existing maturing holdings of Eurobonds. This issue follows the first issue of 10-year debt in local currency (the previous maximum maturity was seven years for the local debt), which was completed last month. The issue offered an attractive interest rate of 8.24 percent to investors. Lebanon already swapped $2 billion worth of Eurobonds back in May. In April, Lebanon issued $950 million worth of Eurobonds, of which $600 million have a five-year maturity and offer a 5 percent yield and $350 million with a 14-year maturity and 6.4 yield. Currently Lebanon’s gross public debt stands at $54 billion, a hefty 130 percent of gross domestic product.
Remittance costs dip, but still high
With a stalling economy, the Lebanese become more dependent on remittances and are bound to welcome the news that the cost of sending remittances is dropping. According to the World Bank, it cost $22 to send $200 from the United States to Lebanon in the third quarter of the year, down from $28 a year ago. For a $500 transfer, it cost $26, down from $32.5 a year ago. It ranked as the third most expensive country for $200 transfers from the US and eighth most expensive for $500 transfers. The World Bank ranking included 15 countries from Latin and central America, seven countries in East and Southeast Asia, five countries in Africa and Lebanon. The World Bank also indicated that sending $200 from Germany to Lebanon would cost $30, up from $27 in the same period last year, and sending $500 would cost $37, up from $36 (also in the same period last year).
Credit Agricole Suisse aims at expansion
The private bank Credit Agricole Suisse (CAS) is looking to expand its wealth management services in Lebanon, some of the bank’s top brass tell Executive. “We are not going to disclose figures but our idea is to double in three years the assets that we manage directly here,” says Youssef Dib, head of private banking at the Switzerland-based financial group. The bank, which is part of France-based Credit Agricole SA, opened a fully-owned Beirut-based subsidiary in 2006. According to Dib, the Lebanese capital is attractive because it has both an active local investor community and acts as a hub for Lebanon’s global expatriate community. Last month, The Credit Agricole Group, which has suffered from the ongoing European financial crisis, divested from a troubled Greece-based bank called Emporiki, taking a $2.6 billion hit. Ratings downgrades and restructuring needs seen at the parent group in recent years did not degrade the trust of local wealth management clients in CAS or its subsidiary, Credit Agricole Suisse (Liban), according to the latter’s chief executive, Peter Chamlian. “I know the market in the area, I know the business needs, and I think we can achieve a lot especially since we have turned a nice page with the sale of Emporiki,” says Chamlian.
