Industry players credit central bank for laying down the law on risky instruments
By Osama Habib
Daily Star staff
Wednesday, September 17, 2008
BEIRUT: Low investments in the American market, abundant liquidity and tough Central Bank regulations have allowed Lebanese banks and financial institutions to remain immune to the fallout of the global financial crisis, leading bankers and investors said on Tuesday. Local bankers interviewed by The Daily Star all expressed confidence that Lebanon's financial sector would continue to grow and prosper both locally and regionally despite the troubles in the US and European markets.
All of these bankers gave credit to the conservative lending policies of most banks and to the tough regulations of the Central Bank - which literally prohibits institutions from making any investments in US subprime papers.
"We simply don't have any subprime paper in the US," said Makram Sader, the secretary general of the Association of Banks in Lebanon (ABL).
"What is more important is that Lebanese banks are very liquid and most of this cash is in foreign currencies," Sader said.
Nearly 50 percent of bank assets in Lebanon are in cash, a ratio is considered very high by international standards, according to the Central Bank.
Governor Riad Salameh recently instructed Lebanese banks to finance only 60 percent of any real estate loan while the rest of the money should be paid up front by the investors.
This step was adopted to avoid any subprime real estate crisis similar to the one which took place in the US.
"We can't take unforeseen risks with the deposits of our customers and for this reason we study carefully any big loan proposal," Sader said.
He added that because Lebanon does not have a last resort such as oil, local banks prefer to keep large amounts of cash to weather any crisis.
"The Gulf countries peg their currencies to the US dollar and use their massive oil reserves as a last resort. But in Lebanon we do not have such minerals and for this reason we count on prudent lending policies," he said.
He added that in the Gulf banks invest nearly 90 percent of the depositors' money while in Lebanon the banks only use 50 percent of the deposits to make any investments.
Citing an example, Sader said that total retail bank lending, including housing, car and personal loans, does not exceed $5.6 billion. He added that 40 percent of the retail lending goes to housing.
"According to the calculations of the ABL, total housing loans are close to $1.7 billion and this covers 36,000 clients," Sader said.
Francois Bassil, the chairman of the ABL and the president of Byblos Bank, told reporters after meeting Finance Minister Mohammad Shatah on Tuesday that local banks ask any investor seeking a loan for a real estate project to provide collateral worth twice the amount of the desired loan.
Jean Riachi, the chairman of FFA Private Bank, told The Daily Star that Salameh prohibits any financial institution and banks to make investments in risky instruments.
"What history has proved is that even the biggest banks around the world have made wrong assumptions despite their high rankings among some rating agencies," Riachi said.
He added that some of the banks which suffered setbacks in the recent crisis used to preach the Lebanese banks about prudent lending and investment policies.
"Now this attitude is no longer acceptable by the Lebanese banks. This is not a question of the banks being big or small because what matters now is the leverage ratio [i.e. solvency ratio] of the banks," Riachi said.
He added that many Lebanese banks and private banks have much better leverage ratios than banks with billions of dollars in capital.
"Now the investors feel more confident in the Lebanese banking system and this will probably pay off in the long run," Riachi said.
Other bankers stressed that the biggest challenge still facing the local banks is the public debt, currently worth more than $45 billion. But most believe that this issue could be resolved if the government implemented fiscal reforms and speeded up the privatization of the telecom sector.
رياض سلامة أولم في واشطن لكبار ممثلي المصارف الدولية واللبنانية
لبنان لم يتأثر بالأزمة المالية ولا نتائج سلبية على الاستقرار التسليفي
وطنية
11/10/2008
يشارك حاكم مصرف لبنان رياض سلامة في الاجتماعات السنوية للبنك وصندوق النقد الدوليين في واشنطن من 10 الى 13 الحالي، وللمناسبة، دعا عددا من كبار ممثلي المصارف الدولية واللبنانية في واشنطن الى مأدبة فطور في فندق ال
"Seasons Four"
لمناقشة الأوضاع المستجدة في القطاع المصرفي في العالم
والقى سلامة كلمة امام الحضور قال فيها: "لبنان وقطاعه المصرفي لم ولن يتأثرا بالازمة المالية العالمية ولن يكون هنالك اي نتائج سلبية على الاستقرار التسليفي. ان هذا الامر جاء نتيجة سلسلة من التدابير اتخذها مصرف لبنان خلال سنوات عديدة كان هدفها تحصين رسملة المصارف وترشيد عملها وابعاد القطاع ككل عن الممارسات التي كادت تطيح بالنظام المصرفي العالمي مرغمة الحكومات والمصارف المركزية على ضخ اكثر من 3 ترليون دولار بشكل او بآخر لتعويم القطاع المصرفي
وتابع: "ان مصرف لبنان اعتبر ومنذ اكثر من عشر سنوات، ان التعاميم الاحترازية ضرورية لتعزيز القطاع المصرفي، وان حرية السوق واحترام قواعده لا يتناقضان مع وضع اسس تنظيمية وقائية. لذلك اصدر مصرف لبنان خلال السنوات الخمس عشرة المنصرمة مئات التعاميم التي حافظت على القطاع ماليا وخفضت المخاطر لديه. هذا الامر لم نشهده لدى الدول المتقدمة حيث ان همها الوحيد تركز عبر تطبيق مبادىء بازل 1 و2 على حماية مصارفها من الازمات المتوقعة في الدول النامية ، الا ان النكبة اتت من الداخل
واوضح ان "شبه انهيار النظام العالمي كان احد اسباب ال
Leverage
الذي تجسد خلال الاسترسال في التسليف لشراء اصول مالية وعقارية ومن ثم تسنيد هذه التسليفات وربطها بمشتقات مالية واعادة التسليف عليها وبيعها في الاسواق. وتشمل ابرز هذه المشتقات ال
subprime
وان ما شجع في نجاح هذه المشتقات نسب الفائدة المرتفعة عليها مقارنة مع فوائد منخفضة في العمل المصرفي التقليدي. هذا الامر تم تجنبه في لبنان منذ سنوات من خلال تنظيم التعاطي مع المشتقات المالية واخضاعها لترخيص من المجلس المركزي لمصرف لبنان وعدم السماح بدخول ال
subprime
الى قطاعنا المصرفي. كما حظرنا على المصارف اصدار ضمانات على هذه المشتقات مقابل اموالها الخاصة وقمنا بممارسة سياسة فوائد واقعية تمنع البحث عن مردود مرتفع يحمل المزيد من المخاطر وضبطنا السيولة من خلال ادوات أصدرها البنك المركزي كشهادات الايداع عبر فرض الاحتياطي الالزامي على كافة الودائع وبكافة العملات. ومن اسباب الازمة ايضا إفلاس المصارف، ومنها الكبير، وهذا ما رفضناه دائما في لبنان ولا زلنا على هذه السياسة
وتابع: "لقد حققنا اصلاحا مصرفيا بين العامين 1997 و2004 وكان من نتيجته خروج اكثر من 30 مصرفا من السوق دون اي خسارة للمودعين او المصارف المراسلة واستعملنا الصلاحيات الممنوحة لنا في قانون اندماج المصارف وارسينا هندسة مالية مولت كلفة هذا الاصلاح دون ان تتحمل الدولة او المصرف المركزي او مؤسسة ضمان الودائع اية خسائر ودون ان يتأتى عن ذه الهندسة اي تضخم. وهكذا دعمنا الثقة في قطاعنا المصرفي، وأخيرا عمدت الدول في كل العالم، وفي ضوء ما حدث من هلع في اسواق المال، الى دعم مصارفها من اموالها وبكلفة مرتفعة
وقال سلامة: "لقد منحتنا الاسواق دعمها وأظهرت تأييدها لهذه السياسة التي اعتمدناها في لبنان وربما اهم تعبير عن ذلك هو الاستقرار والصمود اللذين شهدناهما في القطاع المصرفي خلال السنوات الصعبة التي مرت علينا. كما يشهد على ذلك النمو في قاعدة الودائع في لبنان والذي من المتوقع ان يصل الى حدود 12% في الودائع و10 في الارباح. هذه الثقة التي بنيت خلال الاعوام هي حقيقية، ومن دلالاتها انه وفي آخر اسبوع من شهر ايلول الماضي حيث كانت الازمة العالمية على أشدها في الاسواق المالية، زادت الودائع المصرفية في لبنان بقيمة 500 مليون دولار في اسبوع واحد فقط
وأشار الى "الاستقرار الذي تشهده الفوائد اليومية بال
intebank
وهي بحدود 3%، والى الطلب المرتفع على شراء سندات الخزينة بالليرة مع الاشارة الى ان الفوائد على هذه السندات بقيت مستقرة وهي تتراوح بين 9 و9,5 % تبعا للآجال ( من 3 أشهر الى 3 سنوات)، وانسحب هذا الاستقرار بالفوائد على سندات الدولة بالعملة الاجنبية، واستقر التأمين على مخاطر التسليف الائتماني اللبناني على نسبة تتراوح بين 4,5 % و6% ما بين بداية العام الحالي ولغاية تاريخه
وذكر حاكم مصرف لبنان بان "الموجودات بالعملات الاجنبية ارتفعت الى رقم قياسي يقارب ال 18 مليار دولار نتيجة لتراجع الدولرة وتسجيل ميزان مدفوعات ايجابي يقارب الملياري دولار
وختم مؤكدا أن "الوضع الصعب في العالم لا يفرحنا، نراقبه عن كثب ونعتبر ان تحرك الحكومات والبنوك المركزية لتأمين السيولة وكفالة الودائع تحرك مسؤول متمنين لها النجاح
هل المصارف اللبنانية آمنة فعلاًً؟
قلق من اتساع الأزمة لتطال كل القطاع المصرفي العالمي
طلبت لجنة الرقابة على المصارف، بعد اجتماعها الجمعة الماضي، تقارير مفصّلة تبيّن العمليات الخارجية لكل مصرف عامل في لبنان قبل 25 الجاري، للتدقيق بمدى التزامها بالتعاميم الصادرة عن مصرف لبنان، والتأكّد من سلامة أوضاعها بما يسهم في تعزيز ثقة المودعين، فضلاً عن حصر الخسائر ومعالجة أسبابها في حال وجودها
نفت مصادر مطّلعة لـ«الأخبار» الشائعات التي تتردد في السوق عن وجود خسائر كبيرة محققة لدى العديد من المصارف اللبنانية من جرّاء الأزمة التي تعصف بالأسواق المالية العالمية، وقالت إن هذه الشائعات، التي تتناول 5 أو 6 مصارف عاملة في لبنان، لا أساس لها إطلاقاً، إذ إن التقارير التي وردت إلى الجهات الرسمية المعنية تفيد بأن هناك مصرفين اثنين تكبّدا خسائر محدودة جداً لا تتجاوز قيمتها 20 مليون دولار، فيما بلغت الخسائر المحصورة لأفراد لبنانيين، كانت تديرها المصارف اللبنانية عبر مؤسسة LEHMAN BROTHERS، حوالى 40 مليون دولار فقط.
■ أسباب نجاة المصارف اللبنانية
لا تجزم المصادر نفسها أن هذه الأرقام تمثّل كل الخسائر التي تكبّدتها المؤسسات اللبنانية، ولا سيما في التوظيفات العائدة للأفراد، إلا أنها تجزم بأن الخسائر النهائية، مهما بلغت، لن تكون كبيرة، وذلك ليس نابعاً من حرص زائد لدى المصارف العاملة في لبنان، بل من ظروف وعوامل مختلفة جعلتها، بالصدفة، خارج دائرة الخطر... فهذه المصارف لم تتعامل مع «الأدوات المعقّدة» لأنها لا تفهم آلية العمل بها، كذلك فإنها لم تضطرّ لفهمها سابقاً لأن المجال كان مفتوحاً أمامها لتسليف الحكومة ومصرف لبنان بعوائد مرتفعة نسبياً، ومن دون أي عناء أو مخاطر، على عكس نظرائها في مناطق كثيرة من العالم، حيث كانت تضطر إلى التوظيف بمخاطر عالية جداً من أجل تحسين مستوى ربحيّتها.
وأوضحت هذه المصادر أيضاً، أن التعاميم التي أصدرها مصرف لبنان في السنوات الماضية لتقييد عمليات المصارف الخارجية، لم تكن تنمّ عن وعي مسبق للمخاطر التي يمكن أن تتعرض لها المصارف اللبنانية، بل كان الهدف منها المحافظة على مستوى عال من السيولة، والمحافظة بالتالي على قدرة الحكومة والمصرف المركزي على الاستدانة وتأمين احتياجاتهما التمويلية من السوق المحلية... وهذا يعني أن ما كان يُعدّ قبل الأزمة العالمية مؤشراً في غاية السلبية، تحوّل إلى «إنجاز» أسهم في تحييد القطاع المصرفي اللبناني حتى الآن، على الأقل.
■ الخوف من اتساع الازمة
وأشارت المصادر المعنية إلى أن تطويق الأزمة في الأسواق العالمية ومنع امتدادها إلى المصارف التجارية التقليدية يعني أن لبنان سيبقى في منأى عن تأثيراتها السلبية المباشرة. أمّا إذا حصل العكس، فإن القلق الكبير هو من أن تصل المصارف الكبرى في العالم إلى مرحلة «التوقف عن الدفع»، وهذا يعني أن المصارف اللبنانية ستتأثر كبقية المصارف في كل مكان، ولا سيما أن المصارف اللبنانية تنتشر بكثافة في الخارج (هناك 11 مصرفاً لبنانياً لديه نشاطات مباشرة في 20 بلداً عبر 53 وحدة مختلفة و80 فرعاً لمصارف شقيقة أو تابعة، كذلك تتعامل المصارف اللبنانية مع 225 مصرفاً مراسلاً في جميع أنحاء العالم...)، كما يوجد في لبنان نشاطات لمصارف أجنبية (10 فروع فضلاً عن مساهمات أجنبية أكثرية في 11 مصرفاً تجارياً و3 مصارف أعمال و16 مكتباً تمثيلياً لمصارف أجنبية)، وتتجاوز الموجودات الخارجية للقطاع المصرفي اللبناني 21 مليار دولار (إحصاءات نهاية 2007)، وهي تشكّل جزءاً أساسياً من مجمل توظيفات المصارف ومن السيولة الجاهزة بالعملات الأجنبية، إذ إن هناك أكثر من 15 مليار دولار كودائع لدى المصارف غير المقيمة، فيما الباقي يتوزّع بين توظيفات في مؤسسات خارجية وتسليفات للقطاع الخاص غير المقيم، علماً بأن أكثر من 90 في المئة من احتياطات المصارف الإلزامية بالعملات الأجنبية (الدولار) موجودة خارج لبنان ويتم إيداعها أو توظيفها في 25 مصرفاً عالمياً، بينها مصارف أميركية.
■ تساؤلات حول التعاميم
الجدير بالإشارة أن مصرف لبنان كان قد أصدر تعميماً يمنع المصارف من التوظيف في مؤسسات غير مقيمة تقلّ درجة تصنيفها عن BBB، كذلك يفرض مصرف لبنان على المصارف الحصول على موافقته للقيام بعمليات مصرفية ـــــ استثمارية في فروعها الخارجية أو في المصارف التي تمتلك فيها أكثر من 20 في المئة من أسهمها... وقد تم طرح تساؤلات عن مستوى الرقابة على توظيفات المصارف في المؤسسات الخارجية التي تقلّ مساهمتها فيها عن 20 في المئة... كذلك طُرحت تساؤلات عن مدى مسؤولية المصرف اللبناني لجهة تغطية الخسائر المحققة من جرّاء مساهمات قام بها لإنشاء شركة في الخارج تتملك حصصاً صغيرة في شركات أخرى أجنبية استثمرت مباشرة أو بصورة غير مباشرة في أيّ أدوات استثمارية خطرة!
■ تطمينات سلامة
وجددّ حاكم مصرف لبنان، رياض سلامة، تطميناته من واشنطن، وقال «إن مصرف لبنان اعتبر، منذ أكثر من عشر سنوات، أن التعاميم الاحترازية ضرورية لتعزيز القطاع المصرفي، وأن حرية السوق واحترام قواعده لا يتناقضان مع وضع أسس تنظيمية وقائية».
وأوضح أن «شبه انهيار النظام العالمي كان أحد أسباب الـ Leverage الذي تجسّد خلال الاسترسال في التسليف لشراء أصول مالية وعقارية، ومن ثم تسنيد هذه التسليفات وربطها بمشتقات مالية وإعادة التسليف عليها وبيعها في الأسواق، وتشمل أبرز هذه المشتقات الـ subprime، وإن ما شجع على نجاح هذه المشتقات نسب الفائدة المرتفعة عليها مقارنةً مع فوائد منخفضة في العمل المصرفي التقليدي، وهذا الأمر تم تجنبه في لبنان منذ سنوات من خلال تنظيم التعاطي مع المشتقات المالية وإخضاعها لترخيص من المجلس المركزي لمصرف لبنان وعدم السماح بدخول الـ subprime، كذلك حظرنا على المصارف إصدار ضمانات على هذه المشتقات مقابل أموالها الخاصة، ومارسنا سياسة فوائد واقعية تمنع البحث عن مردود مرتفع يحمل المزيد من المخاطر وضبطنا السيولة من خلال أدوات أصدرها البنك المركزي كشهادات الإيداع عبر فرض الاحتياطي الإلزامي على كل الودائع وبجميع العملات».
(الأخبار)
هي الزيادة في الودائع في الأسبوع الأخير من شهر أيلول الماضي حيث كانت الأزمة على أشدّها في الاسواق المالية العالمية بحسب ما أعلن حاكم مصرف لبنان رياض سلامة من واشنطن يوم السبت الماضي
قال حاكم مصرف لبنان، رياض سلامة، إن النموّ في قاعدة الودائع في لبنان يصل إلى حدود 12%، أما الأرباح فسترتفع 10%. وأشار إلى أن فائدة interbank بقيت مستقرّة على 3%، وقال إن هناك طلباً مرتفعاً على شراء سندات الخزينة بالليرة إذ إن الفوائد تتراوح بين 9 و9,5% تبعاً للآجال (من 3 أشهر إلى 3 سنوات)، واستقرّ التأمين على مخاطر التسليف الائتماني اللبناني على نسبة تتراوح بين 4,5 و6% حتى الآن. وذكّر بأن الموجودات بالعملات الاجنبية ارتفعت إلى 18 مليار دولار، نتيجة تراجع الدولرة وتسجيل ميزان مدفوعات ايجابي يقارب الملياري دولار
Lebanon's economy can weather the storm - Citigroup
Tuesday, October 14, 2008
BEIRUT: In its first comment about the impact of the global financial crisis on Lebanon, Citigroup reiterated its optimism about the economic and financial outlook despite the global banking and financial turmoil, adding that the country's insulation is now perhaps its greatest asset amid the global turmoil, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group.
It noted that while some hedge funds sold off some Lebanese Eurobonds last month, Lebanese banks and cash-rich individual investors have stepped in. It considered that the restricted ratings of Lebanese banks, because of the low sovereign ratings, have become a blessing as Lebanese banks are far less vulnerable to capital outflows compared with their counterparts in many emerging markets.
It added that what was once considered undesirable is now beginning to look quite attractive. The bank said that Lebanese Eurobonds were considered undesirable several years ago because the country was in a serious debt trap, the politics would not allow policy-makers to implement reforms, and regional uncertainty added to the problem. But things have changed since then, particularly since political stability has been restored with the Doha Accord. It said that, while the rest of the world could be grappling with a global recession, Lebanon could eventually lighten its debt burden and look optimistically to the future.
Citigroup still warned that Lebanon has not overcome its economic challenges. It noted that what is different this time is that, while the problems remain, potential solutions look quite promising. It said strong capital inflows from the Lebanese diaspora have pushed foreign currency reserves to record highs and appreciated the currency band from 1,501-1,511 per US dollar to a narrower and stronger 1,497-1,501 since early September 2008. Also, private sector bank deposits have increased annually by 15.5 percent as of July which is the highest annual growth since 1999. It added that this pace is likely to increase further, as jittery Lebanese return to the comfort and better returns provided by Lebanese banks.
Citigroup expressed doubts that the much-needed privatization of the mobile licenses will go through during the term of the current Cabinet, and considered that a post-election Cabinet should push through the sale.
It believed that although the International Monetary Fund (IMF) is firmly on board to help Lebanon narrow its fiscal and external gaps, the sense of urgency is not there because of ample financing that is pouring into the country. But it warned that the continuing foreign interest in Lebanon is contingent on regional stability. It added that if the region remains stable and the privatization goes through in the second half of 2009, Lebanon's debt dynamics could change significantly.
Citigroup said in July that Lebanon's debt exposure is not as concerning as the headline number suggests due to a committed investor base, robust deposit growth in the banking sector and foreign interest in the real estate sector, while the IMF is monitoring Lebanon's economy and is working on a soft approach to debt sustainability.
In parallel, investors in Lebanese Eurobonds have remained remarkably loyal to Lebanese sovereign debt despite the country's inability to reduce its burden. It said the commitment to sovereign bonds can also be seen by the falling spread in US dollar lending, which suggests that even with lower yields on the bonds, interest remains strong. Further, as Lebanon's debt dynamics do not allow local interest rates to follow US rates, investors are inclined to remain in Lebanese assets to realize steady above-market returns.
Lebanese banks cash in on worldwide turmoil
Deposits are rolling in from spooked investors
By Osama Habib
Daily Star staff
Saturday, October 11, 2008
BEIRUT: The credit squeeze in the United States, Europe and some of the oil-rich Gulf countries has convinced many Lebanese expatriates and Arab nationals to transfer parts of their massive assets to Lebanese banks, local bankers said Friday. "The deposit base in some Lebanese banks surged in the third quarter and this trend is continuing due to the global financial crisis," Saad Andary, the adviser to the chairman of Bank of Beirut and the Arab Countries (BBAC), told The Daily Star.
He added that Beirut was now regarded as a safe haven by many depositors.
At present, total bank deposits in Lebanese banks are close to $73 billion and bankers expect this figure to reach $80 billion by the end of 2008.
The International Monetary Fund has credited the Banque du Liban for adopting stringent measures that shielded Lebanese banks from the direct fallout of the global financial crisis.
Andary said that most of the deposits are coming from Lebanese expatriates who are based in Africa and Europe.
According to the Association of Banks in Lebanon (ABL), more than 45 percent of the assets in Lebanese banks are liquid and most of this liquidity is in foreign currency, which affords protection to these banks.
In addition, the lending-to-deposits ratio is one of the lowest in the region.
The Central Bank prohibits commercial banks from making direct investment in properties in Lebanon or any other country. But banks are allowed to lend, to a certain degree, to investors seeking to develop real estate projects.
"They [Lebanese expatriates] are liquidating some of their portfolios in Europe and the United States and depositing this cash in Lebanese banks," Andary said.
Another banker, who spoke on condition of anonymity, also applauded the ban on direct investment in real estate.
"This policy, which was enforced by [Central Bank Governor] Riad Salameh, has allowed local banks to avoid making any risky investment," the banker said. "At the end of the day banks should not venture with the deposits the clients."
The banker said that investors had confidence in the soundness of Lebanese banking system and this trust was translated into more deposits.
Lebanese bankers stressed that if the flow of deposits increased in the coming months many banks would start paying lower rates on deposits because of various costs and risks associated with digesting such large amounts of capital.
"We have to cut our rates down and we have started doing this few months ago," Andary said.
The average current interest rate on dollar deposits is a little less than 4.5 percent, while the average interest on Lebanese-denominated deposits is between 8 and 9 percent.
Echoing similar views, Joe Sarrouh, the adviser to the chairman of Fransabank, said that banks are getting lot of inquiries from abroad. But he stressed it is difficult to calculate the deposits that are coming to the country for the time being.
The Central Bank issues reports on the growth of Lebanese banks every six months.
"I expect the trend of inflow of deposits to accelerate in the coming few months," Sarrouh told The Daily Star.
He also predicted that that if the current trend continued, many banks in the country would reduce their rates.
By Marc J. Sirois
Daily Star staff
Friday, October 10, 2008
Lebanon has thus far been spared the direct effects of the global financial meltdown, but even though it may be years before the full extent of the crisis can be measured, it is safe to say that no country will emerge unscathed. Provided a full-scale worldwide depression is not in the cards, however, it is also possible that this country could derive net benefit from the experience.
According to the number-crunchers who understand such things, among them the International Monetary Fund's chief representative in Lebanon, Edward Gardner, our economy has little direct exposure to the contagion that has destroyed trillions (yes, trillions) of dollars' worth of wealth in recent days. For this, the experts seem to agree, we should thank the Banque du Liban and its governor, Riad Salameh, for having barred banks in this country from investing in the radioactive debt instruments that have poisoned markets almost everywhere else.
The surprising thing is not that Salameh and his advisers seem to have seen the disaster coming: Rather, it is that so few of their peers - including those in what are supposed to be the world's most advanced economies - were able to do the same. After all, the "subprime" mortgages at the heart of the crisis are not a mystery in themselves: They are loans extended to people who stood a very good chance of not being able to repay them unless absolutely everything went right in both the general economy and their own personal finances.
The front end of the scheme was one that would make a loan-shark proud: Get some ambitious but basically uninformed consumer to borrow money for his or her dream house at a misleadingly low interest rate. Heed rules on disclosure with some fine print about the rate being "variable" every three or five or 10 years, but don't blow the sale by explaining what that might well mean when rates rise (as they must) and are compounded over the length of the loan contract: a far higher payment that cannot be supported for long, leading eventually to foreclosure. Sign the deal, collect your commission, and content yourself with the notion that although some poor family is liable to lose their home, your bank or finance company will be covered because a booming real estate market means it will be able to sell the property for a healthy sum.
And rising prices today means rising prices tomorrow, too, right? Of course! The business cycle has been "banished," the American model has triumphed, ushering in the "end of history" and an era of permanent plenty. And so on and so forth.
Just in case, though, the back end of the scheme was even more insidious than its smiling face: Bundle the obviously flawed mortgages into securities, get so-called "ratings agencies" - apparently run by defrocked used-car salesmen - to affix their august seals of approval on the junk, and hock it to investors around the world.
So that's where much of the global economy is today. Millions of Americans are in danger of foreclosure, and the people and institutions "holding" their mortgages can't hope to recover their investments because the bottom has fallen out of the real estate market. Neither party has any real knowledge of the other, so there isn't even much scope for the negotiation of settlements. Worse yet, much of this now worthless paper is in the hands of large institutional investors which essentially fell for the same fairytale that took in the homeowners - and whose confidence is an essential lubricant for the global economy: Take it away, and you have what we see today.
For now the good news is that the aforementioned prophylactic Lebanon's central bank wrapped around this country's financial sector seems to have kept out the contagion. The bad news is that in some ways at least, the longer the crisis goes on, the less that foresight will matter: Lebanese working in the Gulf and other parts of the world will send less of the remittances that contribute a major portion of GDP, there will be less foreign investment to be had, and Beirut is liable to be in for a nasty surprise the next time it tries to roll over one of its maturing eurobonds in a shriveled credit market.
In the longer run, though, the cloud might have several silver linings. A global economic slowdown might finally rein in the inflationary pressures that have drastically reduced the purchasing power of those Lebanese who can least afford it. Hard times in countries around the world might also lead to a resurgence in protectionism that buys some more time for Lebanese companies to increase their competitiveness. And depleted government coffers in places like Washington and Tehran might so preoccupy their respective leaderships that they spend less time meddling in places like Beirut (but don't bet the house on it).
The best possible scenario is that some lessons will be learned, the worst that they will be the wrong ones.
Devotees of the American economic model, for example, might become less inclined to worship the false god of growth, and so more amenable to valuing collective goods like social stability and individual ones like the lives of newborns who happen not to issue from wealthy families.
But adherents to other philosophies should also be leery, because greed and self-delusion are hardly unique to America - and some people are always apt to convince themselves that they have found a way to make money on the quick. Have a look at the home loans being offered by some Lebanese banks these days: They may or may not be selling bundles out the back door, but the smiling face of low or even no interest (for now) is front and center.
21 October 2008
Lebanon appears to have so far avoided the worst of the global financial crisis, though the country's economy may yet be tested by the threat of foreign capital drying up in the turmoil engulfing international markets.
In a speech in Beirut on October 7, Edward Gardner, the International Monetary Fund's (IMF) chief representative in Lebanon, said the country's economy could prove relatively resilient.
According to Gardner, Lebanon faces a lower threat level than other emerging economies, as the banking sector has few direct links to the current crisis. This is partly due to the central bank not exposing itself to high-risk financial products and limiting private banks from buying into the US subprime market. In 2004, the central bank issued a circular restricting domestic financial institutions from freely trading in the subprime market, while earlier this year it limited bank lending to 60% of the cost of real-estate projects in order to shield the local financial sector from excessive speculation.
Though Lebanon has laboured under a massive national debt, confidence in Lebanese markets remains high due to internal financing from the central bank; large remittances; no history of bank defaults; and banks' maintenance of large liquidity as a buffer to defaults, Gardner said.
While Lebanon had so far remained relatively immune from the worst of the economic crisis, Gardner did warn that there was no room for complacency. "Fundamentally sound institutions are not immune from panic attacks," he said.
In particular, he said Lebanon could be indirectly affected if the powerful economies in the Gulf region were hard hit by the crisis, which could result in job losses for Lebanese expatiate workers, a fall in remittances and a decline in foreign direct investment.
Gardner's comments echoed those of another IMF official, the fund's division chief for its Middle East and Central Asia Department, Domenico Fanizza. On October 3, Fanizza told local media that the global crisis had had no direct impact on Lebanon, "thanks to the supervision of the central bank, which helped the Lebanese banks not to be exposed to the financial crisis abroad".
However, Fanizza too sounded a note of warning, citing some concern that the financial turmoil could translate into decreased economic activity in the Middle East in general, and in the Gulf region in particular.
One possible victim of the economic crisis will be the planned privatisation of Lebanon's two mobile phone networks. The government had hoped to sell off the licences for the state-owned operators before the general election tentatively scheduled for May next year. The sale could generate up to $6bn, which the government had planned to use to pay off some of the state debt.
Economist Kamal Hamdan believes the global downturn could mean that the time is not right to call for foreign or Arab bids for the two networks.
"The financial crisis may turn into a recession in 2009 and of course this will have an impact on the region in general," Hamdan told local media on October 9. "A credit crunch means that investors will be less inclined to put their money on projects."
Gardner also suggested that the telco sell-off might have to be postponed until market conditions were more favourable. "Obviously, you don't want to privatise in a market where there is no credit," he said.
Falling economic confidence and a tightening of global belts could also see a drop in tourism arrivals in Lebanon, impacting one of the country's biggest revenue earners. With the Gulf states providing the bulk of Lebanon's foreign visitors, a roll back of the regional economy could upset the tourism industry, which is still struggling to recover from the setbacks caused by Israel's military intervention in 2006 and the long-running domestic political instability that followed.
According to former Finance Minister Jihad Azour, while Lebanon has so far managed to maintain economic stability, the need remains for a tight hand on the financial markets so as to avoid becoming embroiled in the crisis.
His foremost concern was the continued monitoring of Lebanese banks, "especially their transactions outside of Lebanon and in the markets which have been affected by the crisis," Azour said at a conference on October 8.
Riad Salameh, governor of the central bank, has vowed that the bank will continue its interventionist policy, which he says has been vindicated by the economy's limited exposure to the subprime crisis.
"The central bank will not let any bank fail," Salameh said during a conference in mid-September. "Today, this statement will attract much less criticism as we have seen the US, the UK and other European countries prevent their banks from defaulting even when it necessitated the use of contributors or central-bank money, which we, in Lebanon, have never done."
While promising to keep monetary policy on a short leash, Salameh and the central bank may have their work cut out for them if the global economic crisis takes hold in the Middle East.
A monster roars all day – and much of the evening – next to my Beirut home.
My landlord Mustafa sits in his little soft drinks store downstairs with his fingers in his ears. I work in The Independent's office, windows tight shut, as a slurry of fine powder pours below the frame, coating archives and books, laptop and printer (and Fisk), with a patina of brown, greasy dust. Yes, I have a building site right next door, where diggers roar in an effort to build a spanking new twin-towers apartment complex. All over Beirut, it's the same, the skyline constantly transformed by housing projects and high-rise office blocks. Yup, that's right. In Lebanon, in a country whose name is still synonymous with war – and in a world where capitalism is enduring a collapse of biblical proportions – business is booming.
Now readers, I am not – I am absolutely not – advising you to invest in this little statelet, with its sectarian government and mass graves and squalid Palestinian refugee camps. I am not an economist. At school, I failed O-level maths three times and as a result lost an offered place at Liverpool University. But someone needs to explain to me how this little Middle Eastern cabbage patch is bouncing along so happily amid the cyclones ripping through the world's economy.
Beirut's Blombank has just boasted a record 34 per cent rise in profits in the first three quarters of this year. The chairman of Audi Saradar Bank, who happens to be minister for the displaced in the Lebanese government, says that Lebanon is expected to record its highest GDP growth in many years. House prices continue to soar. And this in a nation that suffers a $45.5bn public debt. So out came the little leather-covered Fisk notebook this week to garner words of Lebanese wisdom from the men (few women) who know the secrets of the country's financial miracle. Well, it turns out the Audi bank did lose about $20m with Lehman Brothers but made a hair's-breadth escape from the Wachovia collapse because the maturity date on its $200m deposit investment fell on 3 October. In all, Lebanon's 58 banks made about $750m profit this year. And why does this money look so safe? Because three years ago, the Lebanese Central Bank forbade all commercial banks to go into derivatives. Not one Lebanese bank made any investments in US sub-prime mortgages. Commercial banks, in fact, are prohibited from making real estate investments anywhere outside Lebanon.
Lebanon, of course, has no oil – or has it? Back in 1976, when Ghassan Tueni was minister of petroleum, most of the world's oil conglomerates showed interest to explore parcels of sea-bed off the coast between Batroun and the northern city of Tripoli. But the day Lebanon was to open offices for the bids in Tripoli, fighting broke out there between Syria and the Palestinians, embracing the very area where staff would be working. Then in 1980, Lebanese economist Marwan Iskander suggested to then President Elias Sarkis that the exploration bids should be opened again. Iskander offered a large Cuban cigar when he told me the Sarkis story. For some reason, all Lebanese smoke cigars when they are talking about financial folly.
"When I made my suggestion, Sarkis turned to me and said: 'Look Marwan, the Lebanese are crazy without oil. If we get oil, they'll go out of their minds! Anyway, if we did find oil, the Syrians are not going to allow us to export it.'" Today, the Syrians have – politically – returned to Lebanon and the Siniora government is in no hurry to discover oil reserves under the Mediterranean.
But the Lebanese may have a commodity as wealthy as oil: it is the only country in the world that has 35-40 per cent of its population working abroad, and they are sending home about $7.5bn a year. Lebanon has also received $1.3bn of its $7.6bn Paris aid commitments – which will total $7.6bn after Lebanese government reforms. Not to be mentioned, by the way, is the estimated $1bn which the Hizbollah militia receives from Iran each year. So much for America's ability to "staunch the flow of money to terrorist organisations".
As for the public debt, no problem. At least $24bn of the $45.4bn is in foreign currency and $21bn in Lebanese currency. But 80 per cent of the foreign debt is held by Lebanese banks or individual Lebanese businessmen who have no interest in taking their own country into bankruptcy; they are quite happy to go on taking their massive interest payments. As for the internal debt, Siniora can print more money if anything goes wrong.
Phew, that's the first time I've ploughed into the profit and loss of this strange country. In the hell-disaster of the Middle East, it's almost comical to find that Lebanon – politically, a Rolls-Royce without wheels – manages to make ends meet. Should the world learn anything from this? Next time we meet, I told Iskander on Thursday, he can define a "derivative" for me. "No," he said, "you can explain it to me!"
How do the Lebanese do it? By being optimistic. Surprisingly, few of them know T S Eliot's dark warning to their ancestors, the Phoenicians. In "Death by Water", he wrote: "Phlebas the Phoenician, a fortnight dead,/ Forgot the cry of gulls, and the deep sea swell/ And the profit and loss./ A current under sea/Picked his bones in whispers/ ...O you who turn to the wheel and look to windward,/Consider Phlebas, who was once handsome and tall as you."
But who in Beirut cares about Phlebas under the Mediterranean? The day may come when the Lebanese can find, richer, darker treasures beneath his bones.
حاكم مصرف لبنان ترأس اللقاء الشهري لوفد جمعية المصارف
الثقة بالوضع النقدي كبيرة ولا يمكن التكهن بتأثر التحويلات
وطنية
4/11/2008
ترأس حاكم مصرف لبنان رياض سلامه اللقاء الشهري لوفد جمعية مصارف لبنان. وخلال اللقاء اكد سلامه ان "الثقة بالوضع النقدي في لبنان كبيرة جدا". وقال: "خلال شهر تشرين الأول الماضي اشترى مصرف لبنان مليار دولار من الأسواق هذا بعد ان اخذت المصارف حاجاتها. ان نسبة الدولرة قد انخفضت الى 71 في المئة وان التوجه لاقتناء الليرة مستمر في التصاعد كماان حركة شهر تشرين الثاني تشير الى فوائض في الدولار في الأسواق. ان هذا مؤشرا جيدا وهو عنوان ثقة لا سيما في الظرف الذي تشهده الأسواق الناشئة التي كما تعرفون تعاني من مشاكل بسبب الأزمة الراهنة. وان تحييد لبنان يعتبر شيئا ممتازا مقارنة ببقية الدول
وأشار الحاكم الى "تراجع للأسواق المالية والأسهم في العالم مما دفع صندوق النقد الدولي الى التدخل من خلال تسهيلات قصيرة الأمد لمواكبة ضخ السيولة التي تقوم بها الدول ومنعا لاي أذى إضافي عالمي
وقال: "من المعلوم ان الأزمة المالية تسببت بنقص كبير بالسيولة، الأمر الذي أتاح المضاربة التي كادت ان تصيب الأسهم اللبنانية
(Eurobonds)
ولحسن الحظ فقد فشلت لان العرض كان قليلا جدا واما الطلب عليها ما زال قائما. ان البعض صرح بان اداء ال
eurobonds
كان جيدا خلال الأزمة
وشدد على إعطاء الأولوية لأمرين مهمين
"1- على كل مصرف إعادة النظر ودرس العقود التي سبق ان عقدها وعلى الجمعية التأكد من إيصال هذه التعليمات الى جميع المصارف
2- ضرورة التنبه الى العروض التي تأتي من شركات كبيرة ممولة من مصارف لبنانية او غير لبنانية لبيع الأسهم في السوق اللبنانية. فان الأزمة هي أزمة سيولة وكافة الدول متورطة بها
وكرر الحاكم مطالبته ادارة المصارف بـ"درس معمق لملفاتها وللعروض التي تأتيها لان أي استثمار غير مصنف ليس مقبولا
وتطرق سلامة الى "ما سمي بلبلة مفادها ان لبنان سيتأثر من انخفاض التحاويل من اللبنانيين في الخارج ولاسيما من هم في الخليج". وأوضح ان "هذا الامر لا يمكن لاحد ان يتنبأ به علما بأن سعر برميل البترول قد حدد في الميزانية على اساس 150 دولارا بينما هو اليوم يساوي 60 دولارا. ان هذا الأمر لا بد ان يظهر إيجابا في فاتورة استيراد المشتقات في ميزان المدفوعات
وبالنسبة للشائعات التي طالت بعض المصارف فأكد "سلامة كل مصرف في القطاع المصرفي
وانتقل الحاكم أخيرا إلى موضوع ال
IBAN
"الذي يعتبر بدء العمل به في لبنان نقلة نوعية للقطاع"، وتمنى على إدارات المصارف "تشجيع هذا الأمر لما فيه سرعة في التنفيذ وشفافية ولعدم مسه بالسرية المصرفية ولا بالقواعد القانونية
9th October 2008
