Bank ratings upgrades
Four of Lebanon’s banks received ratings upgrades from Moody’s Investors Service in April. The agency raised the long-term foreign currency deposit ratings of BLOM Bank, Bank Audi, Byblos Bank and Bank of Beirut from B2 to B1. Byblos Bank’s foreign currency senior and subordinated bond ratings were also raised from B1 to Ba3. The ratings were all deemed stable by the ratings agency. The upgrades are due mostly to the upgrade in Lebanon’s sovereign ratings. Fitch Ratings also followed a sovereign upgrade with bank ratings upgrades in April. Both Byblos Bank and Bank Audi’s long-term issuer default ratings were upgraded from B- to B. Both raters noted that while these upgrades were the result of an improvement in Lebanon’s sovereign rating, they are hampered by the banks’ high exposure to the sovereign and holdings of government paper. Fitch Ratings mentioned that about one half of Lebanese banks’ balance sheets are invested in government debt.
Housing Bank lending to rise
The Housing Bank raised the ceiling on several of the loans it offers this month. The maximum amount obtainable in real estate loans went from $300,000 to $400,000 on loans for building new homes or purchasing existing ones. These loans are usually for a tenor of 20 years. The ceiling on loans for house repairs, carrying a 10-year tenor, was raised from $100,000 to $132,670. Both loans generally carry a grace period of between three months and two years before payments must be made. These raises come at a time when housing prices in Lebanon are also rising. The Housing bank issued $83 million in loans in 2009 and is expected to increase its portfolio by $166 million in 2010.
UAE Central Bank calm over DW exposure
The United Arab Emirates Central Bank issued a circular on April 22 instructing the country’s banks that they need not book provisions for exposure to Dubai World. The memo said: “Banks are not required at the moment to make provisions for loans given to Dubai World.” The central bank also said that it would “provide further guidance to banks concerning the treatment of Dubai World debt in their books.” Some banks have said that they will continue to book provisions despite the circular. The exposure of UAE banks to Dubai World’s debt is estimated to be $15 billion, but the central bank justified their directive by saying that provisions are unnecessary until there are precise figures for exposure and a concrete restructuring plan is in place. Analysts said that forgoing provisions would prevent banks from feeling the full effect of their exposure in their first quarter results. Non-performing loans in the UAE rose 2.4 percent in March from the previous month.
HSBC joins with Allianz-SNA
HSBC and Allianz-SNA announced a new partnership on April 26 which has led to the launch of HSBC Insurance Services Lebanon (HISL). “We are currently in the process of implementing the new bancassurance retail strategy for HSBC that will be launched through a promotional campaign featuring a special promotional offer for our customers,” said James Gebara, senior manager of personal financial services at HSBC at a press conference. HISL will offer six products including life saving, term life, personal accident, home protection, travel and assistance, as well as foreign maid insurance plans. Xavier Denys, chief executive officer of Allianz SNA, implied at the conference that these six offerings would be the beginning of a wider offering to come. “We believe that this partnership is only the start of several goals that we would like to achieve in the Bancassurance relation with HISL,” he said.
Halal on credit in Canada
Mastercard launched its first ‘halal-approved’ credit card in North America in April. The iFreedom Plus Mastercard will be offered by Canada’s UM Financial, an Islamic financial Institution based in Toronto. The card has no monthly fee, no transaction fees and no usury, the element of credit transactions forbidden in Islamic Law. The card also includes discounts on Etihad Airways flights. Omar Kalair, president of UM Financial, told the Associated Press that it will be available in the United States by the end of 2010. According to Kalair, only one other sharia-compliant credit card is available in the West and it is offered in the UK. Kalair estimated that there are more than one million Muslims living in Canada. He also mentioned that non-Muslims may choose to apply for the card as well.
Life insurance ascends
Life premiums in Lebanon’s insurance sector increased by 11.3 percent from 2008 to 2009, according to the annual survey conducted by Al Bayan magazine. The value of total life premiums went from $290.5 million in 2008 to $323.4 million in 2009, with 15 of Lebanon’s 35 life insurance companies posting double-digit growth and three companies showing triple-digit growth. American Life Insurance Company (ALICO) continues to hold the largest percentage of market share, though this margin has been dropping in recent years. ALICO posted $69.6 million in life insurance premiums representing a 21.5 percent market share, down from 26.7 percent in 2008 and 2007, and 34 percent in 2006. In second place, Allianz-SNA posted $49 million in premiums in 2009. Bancassurance and AROPE followed with $34.8 million and $33.2 million respectively, and LIA showed $27.6 million in life premiums. These five insurers represent 66.2 percent of the market. The survey also noted that the top 10 life insurers in Lebanon are all affiliated with commercial banks. Al Bayan’s survey conducted through an exclusive agreement with the municipalities in which premiums are extrapolated from the tax the companies are required to pay on each policy to municipalities. While this method of calculation is imperfect, there currently is no other independent tool for collecting insurance premium data.
Byblos in the Democratic Republic of Congo
Byblos Bank announced that it has acquired Solidaire Banque Internationale in the Democratic Republic of the Congo (DRC) in April, becoming the first Lebanese bank to expand its network into the country. The private Congolese bank has been renamed Byblos Bank DR Congo and offers corporate and commercial services, trade finance, consumer banking and investment services. Byblos said that the acquisition is in line with its strategy of expanding into emerging markets, the goal of which is to have a minimum of 40 percent of Byblos Bank Group’s assets and income coming from locations outside of Lebanon. Walid Kazan, assistant general manager and head of the international network division at the bank told Executive that Byblos chose to move into the market due to its relationships with Belgian traders in the DRC, which was formerly a Belgian colony. Byblos has a correspondent bank in Brussels as part of Byblos Bank Europe, as well as operations in Syria, Sudan, Iraq, the United Arab Emirates, Nigeria, France, the United Kingdom and Cyprus.
Tehran’s big bond offer
One of Iran’s state banks is reportedly planning to issue $270 million in bonds, the Islamic Republic News Agency (IRNA) reported on April 4. The Central Bank of Iran has given the Export Development Bank of Iran permission to issue bonds with one, two and three-year maturities, according to the report. These new bonds come at a time when the United States and the United Nations are threatening the country with new sanctions. Iran is also attempting to modernize its investment capital markets. “The government is now offering broader incentives to foreign investors with fewer regulatory strings attached. [Foreign companies] will be exempt from paying tax and will no longer be subjected to excessive regulation,” said Ali Saleh Abadi, director of Iran’s Securities and Exchange Organization, in an interview with Press TV. Earlier this month, an Iranian official announced that the government would privatize more than 500 state firms in an effort to raise $12.5 billion, but it is still unclear whether these entities will indeed go to private buyers, or be transferred within the Iranian public sector. Though Iran’s lack of integration with the global financial system protected it from the global financial crisis, the country still requires foreign capital to develop its oil industry, according to analysts. However, Iran’s thoroughly publicized intentions to continue its nuclear program have left foreign investors wary.
