Loans provided to Lebanese small and medium enterprises (SMEs) by Kafalat, the government-sponsored loan guarantee company, dropped by 16 percent in 2012 to $138 million, down from $165 million. No suprise amid the domestic and regional political instability, such a drop is a clear indicator of an ailing economy. The number of loans guaranteed totaled 1,025, down from 1,272 a year earlier. However, the average loan size increased to around $134,000, from $130,000 in 2011. Businesses from Mount Lebanon snagged 41 percent of the total, followed by South Lebanon with 22 percent. As for sectors, 39 percent of loans were given to agricultural businesses, the industrial sector received 38 percent, tourism 17 percent and handicraft 4 percent. Specialized technologies accounted for 1 percent of the SME loans.
BDL extends $1.46 billion in credit facilities to local banks
Banque du Liban (BDL), Lebanon’s central bank, is extending financial facilities to local banks against guarantees. A circular issued by BDL in January stated that the interest rate on these facilities, amounting to $1.46 billion, will be fixed at an annual interest rate of 1 percent, to be paid monthly. Banks can borrow from BDL between 15 percent and 60 percent of loans extended to productive sectors, 60 percent of non-housing loans in domestic currency, 100 percent of loans given for higher education, 150 percent of domestic currency loans for research and development, 150 percent of credit to finance investment projects in Lebanon and between 30 and 150 percent of loans to finance environmentally friendly projects. As for housing loans, banks can borrow between 60 and 100 percent of extended loans as long as a single housing loan does not exceed $530,700 and with a maximum of $63 million worth of housing loans per semester in 2013. BDL allocated $817 million to the housing sector followed by environmentally friendly projects at $294 million, productive sectors at $206 million, non-housing loans at $80 million and education at $33 million. Research and development and investment projects were allocated $15 million each.
Lebanon’s commercial bank assets reach $150 billion
Assets held by Lebanon’s commercial banks reached $150 billion as of the end of November 2012, a 7 percent increase on the end of 2011. Private sector deposits grew by 6 percent on the end of 2011 and accounted for $123 billion, 82 percent of the total assets. Some $80 billion of the deposits were held in foreign currency, an increase by 4 percent on the end of 2011. Domestic currency deposits were up 11 percent at $44 billion. Non-resident deposits accounted for $23 billion, a 9 percent growth on the end of 2011. Loans to the private sector reached $43 billion as of the end of last November, a 9 percent increase on the end of 2011, while claims on the public sector totaled $31 billion, a 5 percent increase. The capital base of the banking sector stood at $12 billion as of November, up 15 percent in a year.
A haven for dirty dough
An estimated $21 billion of illicit financial flows entered Lebanon between 2001 and 2010, making the country the 30th largest recipient of illegal money among the 143 countries surveyed by Global Financial Integrity, a Washington based non-profit organization which aims to curtail the cross border flow of contraband cash. China took the top spot with $2.7 trillion. Two countries from the Middle East feature in the top ten recipients of illegal flows: Saudi Arabia ranked third with $210 billion and the United Arab Emirates ranked 10th with $107 billion. The report concluded that in the past decade developing countries lost on average $586 billion per year in illegal outflows, accounting for a cumulative $5.8 trillion. The Middle East and North Africa region saw the highest growth of illicit flows in the past decade, growing by 26 percent. Sub Saharan Africa followed, growing by 24 percent and Asia at 8 percent. As for the total amount of illegal flows, the bulk, 60 percent, occurred in Asia with China. The MENA region accounted for 10 percent of all illicit flows.
Bank Audi launches operations in Turkey
Bank Audi officially launched last month Odeabank, its fully owned Turkish subsidiary and the first foreign bank to be granted an operating license by Turkey in 15 years. The license was obtained in September 2012. Within the first two months of operations, Odeabank opened six branches, drew in over 1,500 customers, raised deposits totaling more than $1.4 billion and assets amounting to $2 billion. Samir Hanna, Bank Audi Group chief executive, said that “Turkey was a right investment decision and that it will be one of the locomotive countries in the growth of Audi Saradar Group.” For 2013, the bank is aiming to develop 32 branches and reach a headcount of 1,000 employees. “Our aim is to grow in the domestic market and to contribute to the growth of the business volume between Turkey and the Middle East, with all the advantages this entails,” said Hüseyin Özkaya, Odeabank’s general manager.
Bill Gates Group invests $1 billion in Orascom Construction Industries
American business tycoon and philanthropist Bill Gates, known for co-founding Microsoft, is leading a group of American investors deploying $1 billion in Egypt’s Orascom Construction Industries (OCI), a fertilizer and construction company that is the country’s biggest publicly-traded company. The transaction consists of a transfer of all the Egyptian listed stock of OCI as well as its global depositary receipts (GDR) to an Amsterdam-based unit to be listed on the NYSE Euronext Amsterdam by the middle of February. The share exchange has attracted more than $2 billion in commitments from investors. OCI is relocating its head offices to Amsterdam from Cairo. According to Egyptian billionaire and chief executive of OCI Nassef Sawiris, the listing in Amsterdam will help the company lower its borrowing costs. The Sawiris family and Dubai-based private equity firm Abraaj Group, which together own the bulk of the shares in OCI, already gave in their GDRs for exchange.
B.D.L. demands the establishment of compliance departments
Lebanon’s commercial banks and financial institutions have been given until September to create independent compliance departments. Banque du Liban (BDL), Lebanon’s central bank, has mandated that the departments must comprise a Legal Compliance Unit and an Anti Money-Laundering/Combating the Financing of Terrorism (AML/CFL) unit. The AML/ CFL unit is responsible for verifying the implementation of the critical measures to combat money laundering of terrorism financing. The responsibilities of the compliance unit extend to the operations of the Lebanese banking sector and their subsidiaries, both domestically and overseas.
The UAE transfers $1 billion to Jordan
To assist Jordan in financing development and infrastructure projects, the United Arab Emirates has transferred $1 billion to the country’s central bank. This follows a $250 million transfer to Jordan’s central bank in December. The $1.25 billion deposited so far is separate from the $1.25 billion allocated by the UAE to Jordan as part of the $5 billion over a five-year period agreed on by the Gulf Cooperation Council in 2011. The UAE and Jordan agreed on a framework to regulate the $1.25 billion grant, which will be transferred through the Abu Dhabi Fund for Development (ADFD). According to Jordan’s planning minister Jafar Hassan, the grant will allow the country to undertake several capital projects that would stimulate the kingdom’s economy and attract investments. ADFD Director General Mohammed Saif al-Suwaidi said that the $1.25 billion grant would be deployed on infrastructure projects and housing schemes.
