Behind SGBL’s capital raise

Several Lebanese banks, from Bank Audi to Bank of Beirut to Fransabank, raised capital last year through the issuance of preferred shares — stocks with dividends but without voting rights — and beefed up their total capital ratios. Last month, Société Générale de Banque au Liban (SGBL) became the latest Lebanese bank to issue $125 million of non-convertible preferred shares — an increase from the initial plan to issue $100 million, following oversubscription to the shares — at a 7 percent yield, redeemable after five years. SGBL went a step further in strengthening its equity as it also raised its common equity capital by $200 million, bringing the total capital increase to $325 million. Of this $200 million common equity increase, half came from the issuance of common shares to the bank’s existing shareholders and the other half came from retained earnings, which totaled $115 million in 2012, meaning that