Primary surplus in public budget. Debt to GDP is declining

The fiscal deficit has widened so far this year, but a primary surplus has been registered, according to Alain Bifani, Director General of the Ministry of Finance (MoF).

The fiscal deficit widened by 33 percent to reach $1.7 billion in the first half of 2015. The primary surplus, which represents revenues and expenditures minus the service of the debt, reached $475 million. Primary surplus represented 2.6 percent of the Gross Domestic Product (GDP) in 2014.

The Debt to GDP ratio de...

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Lebanon tops Arab world in financial secrecy. It mixes secrecy with big tax exemptions

The Tax Justice Network (TJN) said it has ranked Lebanon first in the Arab world and seventh globally in the 2015 Financial Secrecy Index (FSI).

"Lebanon has sailed against the prevailing winds on global financial transparency and continues to make secrecy a core selling point," according to TJN, which describes itself as "a coalition of researchers and activists focused on the harmful impacts of tax avoidance, tax competition and tax havens."

Lebanon has a very high secrecy score,...

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Alpha banks still growing at a slower pace. Tough operating environment puts pressure on assets, loans and deposits

Alpha banks, the first 14 banks with deposits exceeding $2 billion each, have reported a slowing activity this year, according to the Alpha report issued by Bankdata Financial Services.

Consolidated assets grew by 2.6 percent over the first nine months, against 6.6 percent during the same period last year. Domestic assets grew by three percent, while foreign assets rose by 1.1 percent. Out of total activity, 80 percent was tied locally and 20 percent abroad, as of the end of September, th...

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Bank account hacking on the rise. Lack of awareness is cited as the cause of most cases

The number of cybercrimes through online banking accounts has increased from one case in 2011 to 63 today, according to the Special Investigation Commission (SIC) of the Central Bank (BDL), which said that the stolen amounts range between $1,500 and $2 million.

"Cybercrimes are not individual cases, but rather happen through well connected criminal organizations or criminals aware of where to carry out their hacking," said Abdul Hafiz Mansour, Secretary of the SIC. "Lebanon is a free eco...

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Zero interest loans for eco-friendly plants. Three plants to start benefiting

An agreement was signed on November 6 between the Central Bank and the Ministry of Environment (MoE) to give low-interest loans to industrialists who will apply environmentally friendly standards.

The agreement is part of the World Bank-funded Lebanon Environmental Pollution Abatement Project (LEPAP). The project, which is valued at $18 million, gives companies incentives to reduce their carbon footprint. The loans have a near zero interest rate.

The ministry has so far accepted p...

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Bank Audi plans to expand foreign footprint. Eyes UK and sub-Saharan countries

Bank Audi is planning to have its foreign entities constitute 60 percent of its consolidated activity. Around half of the bank's activity has been derived from its entities outside the local market.

Freddie Baz, Group Strategy Director and Vice Chairman, said: "Our aim is to make Audi's share in the local market between one third and 40 percent of the total group profile." The goal behind this is to expand the bank's portfolio outside and reduce the impact of the local bank's results on ...

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FATCA or GATCA which tax law to rule?. A new global tax information law is expected by 2016

The US Foreign Account Tax Compliance Act (FATCA) could be eventually expanded into a more global tax information sharing agreement between countries. This international act is called 'Global Account Tax Compliance Act' (GATCA).

FATCA aims at preventing tax abuse by US persons living abroad and requires foreign financial institutions to identify and provide information on US clients with accounts outside the US.

Local banks have not yet received any official notification about GAT...

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Lebanon’s debt oversubscribed for 2015. Showing sign of continuous confidence by investors

The Ministry of Finance (MoF) announced today that it has succeeded in covering the full debt duties in foreign currencies for 2015 and part of another debt to be settled for 2016, through a Eurobond issue valued at $1.6 billion.

"The $1.3 billion sovereign Eurobond issue aims at financing debt duties in foreign currencies for the second half of 2015. A swap for bonds maturing on 19/01/2016 has also been executed at a value of $318 million," a statement by the MoF said.

"The curr...

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Central Bank allows corporate debt restructuring. To develop financial markets and reorganize relationship between debtors and creditors

Banks and financial institutions will be allowed to restructure their loans, according to a basic circular issued by the Central Bank (BDL) this week. The circular targets loans provided mainly to companies.

"This circular is not worrying about any default crisis in the market," said Marwan Mikhael, Head of Research at Blominvest Bank. "Authorities have been working for a long time on a law similar to the concept of the US Chapter 11 law, which helps protect debtors, but due to political...

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A $750 million Eurobond swap. To cover maturing debt in 2016

The Ministry of Finance (MoF) has recently begun a swap operation of $750 million Eurobonds to mature on January 19, 2016. This measure is to cover a debt due for payment at the beginning of next year.

"The swap process is underway, but it's too early to evaluate the appetite of investors," said Wassim Mansouri, Advisor to the Minister of Finance. "Banks represent the bulk of these bond holders, while the rest are foreign investors. That's why the MoF is optimistic about the success of th...

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Loans to support food and tourism institutions. The maximum loan amount is LL75 million for seven years

The Economic and Social Fund for Development (ESFD) is cooperating with the Syndicate of Owners of Restaurants, Cafes, Nightclubs & Pastry Shops in Lebanon, in order to support food and tourism companies through loans. These loans fall within the Fund's programs to support Small and Medium Enterprises (SMEs) in productive sectors.

"The purpose is to support food and tourism companies to improve their current production conditions, in the light of the food safety campaign by the Ministry o...

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Disclosure by banks available to clients. It is mandatory to show lending and deposit rates computations

The Central Bank's Basic Circular No. 134, which requires banks to apply measures to ensure transparent and fair dealings with their customers, has been completely implemented, said executives from Bank of Beirut and Credit Libanais.

The Central Bank, which issued the circular in February this year, had set September 30 as deadline for banks and financial institutions to comply with the provisions of the circular.

Georges Awad, Head of Retail and Branches Division at Bank of Beiru...

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FFA: BLOM shares stable Audi and Byblos to decline. Growth in net profit, assets, deposits, and loans of each of the banks in 2015

FFA Private Bank revised down the target price on the shares of Bank Audi and Byblos Bank due to tough operating conditions and foreign exchange devaluation in key global markets. FFA kept the target price on Blom Bank's stock unchanged.

The fair value estimate for Bank Audi was lowered to USD 7 from USD 7.50, while it was slashed on Byblos Bank's stock to USD 1.60 from USD 1.65. Blom Bank's shares remained unchanged at USD 11.

"We note that Blom Bank is the sole overweight in our ...

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Beirut Stock Exchange halted for technical issues. No impact was registered against listed companies

Trading was halted on the Beirut Stock Exchange (BSE) today due to a technical difficulty, according to a statement issued by the BSE.

According to Ghaleb Mahmassani, Vice President of the BSE, an electronic malfunction affected computers. He said that he technicians were unable to fix the problem quickly but that trading may resume normally tomorrow.

Toufic Karam, Head of Capital Markets at FFA Private Bank, said: "The technical error will not impact the listed companies as the vo...

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Central Bank sets rules for incubators and accelerators. Knowledge economy to account for five percent of GDP by 2030

Incubators and accelerators are allowed to invest only up to five percent in the capital of each startup company that benefits from their support, according to a circular by the Central Bank (BDL) issued recently.

"BDL is keen to determine the goal of each investor in startups," said Marwan Mikhael, Head of Research at Blominvest Bank. "Instead of having high shares in a target company and provide it with a priority, BDL considers that incubators and accelerators should be neutral and ser...

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Primary surplus in public budget. Debt to GDP is declining, but more reforms are needed

The banking sector has been a main support to finance the State's needs and reduce the burden of high public debt, according to the Ministry of Finance (MoF).

Banks have foreign currency reserves worth $65 billion, representing 93 percent of the total public debt. "These reserves exceed the State's debt in foreign currency by two times and a half," said Alain Bifani, Director General of the MoF. He said that banks are financing 88 percent of the State's debt.

The fiscal deficit ha...

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Lebanon tops Arab world in financial secrecy. It mixes secrecy with big tax exemptions

The Tax Justice Network (TJN) said it has ranked Lebanon first in the Arab world and seventh globally in the 2015 Financial Secrecy Index (FSI).

"Lebanon has sailed against the prevailing winds on global financial transparency and continues to make secrecy a core selling point," according to TJN, which describes itself as "a coalition of researchers and activists focused on the harmful impacts of tax avoidance, tax competition and tax havens."

Lebanon has a very high secrecy score,...

Article details

Alpha banks still growing at a slower pace. Tough operating environment puts pressure on assets, loans and deposits

Alpha banks, the first 14 banks with deposits exceeding $2 billion each, have reported a slowing activity this year, according to the Alpha report issued by Bankdata Financial Services.

Consolidated assets grew by 2.6 percent over the first nine months, against 6.6 percent during the same period last year. Domestic assets grew by three percent, while foreign assets rose by 1.1 percent. Out of total activity, 80 percent was tied locally and 20 percent abroad, as of the end of September, th...

Article details

Bank account hacking on the rise. Lack of awareness is cited as the cause of most cases

The number of cybercrimes through online banking accounts has increased from one case in 2011 to 63 today, according to the Special Investigation Commission (SIC) of the Central Bank (BDL), which said that the stolen amounts range between $1,500 and $2 million.

"Cybercrimes are not individual cases, but rather happen through well connected criminal organizations or criminals aware of where to carry out their hacking," said Abdul Hafiz Mansour, Secretary of the SIC. "Lebanon is a free eco...

Article details

Zero interest loans for eco-friendly plants. Three plants to start benefiting

An agreement was signed on November 6 between the Central Bank and the Ministry of Environment (MoE) to give low-interest loans to industrialists who will apply environmentally friendly standards.

The agreement is part of the World Bank-funded Lebanon Environmental Pollution Abatement Project (LEPAP). The project, which is valued at $18 million, gives companies incentives to reduce their carbon footprint. The loans have a near zero interest rate.

The ministry has so far accepted p...

Article details

Bank Audi plans to expand foreign footprint. Eyes UK and sub-Saharan countries

Bank Audi is planning to have its foreign entities constitute 60 percent of its consolidated activity. Around half of the bank's activity has been derived from its entities outside the local market.

Freddie Baz, Group Strategy Director and Vice Chairman, said: "Our aim is to make Audi's share in the local market between one third and 40 percent of the total group profile." The goal behind this is to expand the bank's portfolio outside and reduce the impact of the local bank's results on ...

Article details

Central Bank allows corporate debt restructuring. To develop financial markets and reorganize relationship between debtors and creditors

Banks and financial institutions will be allowed to restructure their loans, according to a basic circular issued by the Central Bank (BDL) this week. The circular targets loans provided mainly to companies.

"This circular is not worrying about any default crisis in the market," said Marwan Mikhael, Head of Research at Blominvest Bank. "Authorities have been working for a long time on a law similar to the concept of the US Chapter 11 law, which helps protect debtors, but due to political...

Article details

A $750 million Eurobond swap. To cover maturing debt in 2016

The Ministry of Finance (MoF) has recently begun a swap operation of $750 million Eurobonds to mature on January 19, 2016. This measure is to cover a debt due for payment at the beginning of next year.

"The swap process is underway, but it's too early to evaluate the appetite of investors," said Wassim Mansouri, Advisor to the Minister of Finance. "Banks represent the bulk of these bond holders, while the rest are foreign investors. That's why the MoF is optimistic about the success of th...

Article details

Loans to support food and tourism institutions. The maximum loan amount is LL75 million for seven years

The Economic and Social Fund for Development (ESFD) is cooperating with the Syndicate of Owners of Restaurants, Cafes, Nightclubs & Pastry Shops in Lebanon, in order to support food and tourism companies through loans. These loans fall within the Fund's programs to support Small and Medium Enterprises (SMEs) in productive sectors.

"The purpose is to support food and tourism companies to improve their current production conditions, in the light of the food safety campaign by the Ministry o...

Article details

Disclosure by banks available to clients. It is mandatory to show lending and deposit rates computations

The Central Bank's Basic Circular No. 134, which requires banks to apply measures to ensure transparent and fair dealings with their customers, has been completely implemented, said executives from Bank of Beirut and Credit Libanais.

The Central Bank, which issued the circular in February this year, had set September 30 as deadline for banks and financial institutions to comply with the provisions of the circular.

Georges Awad, Head of Retail and Branches Division at Bank of Beiru...

Article details

FFA: BLOM shares stable Audi and Byblos to decline. Growth in net profit, assets, deposits, and loans of each of the banks in 2015

FFA Private Bank revised down the target price on the shares of Bank Audi and Byblos Bank due to tough operating conditions and foreign exchange devaluation in key global markets. FFA kept the target price on Blom Bank's stock unchanged.

The fair value estimate for Bank Audi was lowered to USD 7 from USD 7.50, while it was slashed on Byblos Bank's stock to USD 1.60 from USD 1.65. Blom Bank's shares remained unchanged at USD 11.

"We note that Blom Bank is the sole overweight in our ...

Article details

Beirut Stock Exchange halted for technical issues. No impact was registered against listed companies

Trading was halted on the Beirut Stock Exchange (BSE) today due to a technical difficulty, according to a statement issued by the BSE.

According to Ghaleb Mahmassani, Vice President of the BSE, an electronic malfunction affected computers. He said that he technicians were unable to fix the problem quickly but that trading may resume normally tomorrow.

Toufic Karam, Head of Capital Markets at FFA Private Bank, said: "The technical error will not impact the listed companies as the vo...

Article details

$1.5 billion in Eurobonds to be issued next month. Issue of the balance of $3.5 billion due before the end of 2015

The Ministry of Finance (MoF) is preparing to issue a Eurobond on September 1 to cover the country's debt service for the full year of 2015.

Parliament has approved the issuance of bonds worth $2.5 billion, although the amount due for this year is worth $3.5 billion. The MoF had already finalized the issuance of Eurobonds worth $2.2 in February and is working now on covering the remaining amount.

In 2014, the MoF submitted a draft law to enable the Government to issue bonds worth ...

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Moody’s praises banks for their high liquidity. Deposits are growth driver, but pressure on profitability, credits, and asset quality lead to negative outlook

The banking system's funding strengths are expected to remain, along with possible improvements in capitalization, said Moody's Investors Service in a report published yesterday.

The rating agency said banks will continue to grow their stable deposit funding bases over the outlook period. Customer deposits represent more than 80 percent of system liabilities and are supported by inflows of remittances from the diaspora, which is equivalent to 15-20 percent of the Gross Domestic Product (G...

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Insurance premiums will grow by 25 percent till 2017. Regional stability would find new growth opportunities for insurance companies

Insurance premiums are expected to grow at an annual average between 20 percent and 25 percent in the upcoming two years, up from an annual average of five percent to six percent currently, according to experts in the industry.

"The insurance sector is still well-performing compared to other countries in the region, due to continuous confidence in the economy, availability of high skilled human resources and increase in awareness about insurance," said Assaad Mirza, former Chairman of Ass...

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Public debt to reach $75 billion in 2016. Public debt to reach $75 billion in 2016

As fiscal deficit remains high, public debt is increasing at an annual average ranging between $4 billion to $5 billion, which will push it to $75 billion in 2016.

"Public debt is expected to reach this level with the continuous increase in spending," said Former Finance Minister Jihad Azour. Total budget deficit reached $2.48 billion in 2014, up by 40 percent compared to 2013, according to the Ministry of Finance (MoF). Total expenditures rose to $12.2 billion in 2014, up by 15 percent. ...

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New LL50,000 bill to be released. The special paper currency will be in circulation starting August 1

The Central Bank (BDL) has issued a the new design for the LL50,000 paper currency, in celebration of the 70th anniversary of the Lebanese Army.

These bills, which will be put in circulation as of next month, are signed by BDL Governor, Riad Salameh and First Vice-Governor, Raed Charafeddine.

The size of these paper currencies, which have a dominant blue color, has remained unchanged.
...

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Central Bank reserves stand at $39 billion. More stability of the monetary policy and currency, and more confidence in the banking sector

The Central Bank (BDL) reserves in foreign currencies reached $38.8 billion at the end of the first half of 2015, up by around 15 percent from the same period last year, according to figures published by BDL. These reserves exceeded $39 billion in mid July.

"These high reserves are strengthening the balance sheet of the BDL in a way as to make it better able to intervene in the foreign exchange market and guarantee more stability of the lira and interest rates," said Muhammad Baasiri, th...

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Income tax evasion up to $1.9 billion yearly. Recouping it would pay off half the deficit

Out of a potential income tax of $2.9 billion per year, the public Treasury is only grossing one third, according to a study by Bank Audi, which claims that this brings income tax evasion to $1.9 billion per year.

Marwan Barakat, Head of Research at Bank Audi, said: "The uncollected income tax represents the largest contributor to tax evasion. There is also delinquency in payment of some electricity bills and under-declaration of the value of real estate transactions, leading to lower reg...

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