Tuesday, Jan 27, 2009

BEIRUT (Zawya Dow Jones)--Bank of Beirut, one of Lebanon's 10 largest banks, said Tuesday it has launched an investment fund with a targeted capital of 50 billion Lebanese pounds ($33.3 million) to invest in Lebanese fixed-income instruments.

The fund, named Beirut Lira Fund II, will invest in fixed-income instruments mainly certificates of deposits issued by the central bank and treasury bills issued by the Lebanese government, Mona Gabriel, head of the assets and fund management department at Bank of Beirut told Zawya Dow Jones.

This is the most appropriate time to launch a fund to invest in debt instruments denominated in the Lebanese currency because the interest offered on debts in the Lebanese pound is higher than the one offered on debts in other currencies, she added.

Another reason for launching the fund now is that the dollarization rate in Lebanon is falling, said Gabriel, adding that the dollarization rate, which represents the ratio of the deposits in the U.S. dollar to overall deposits, has fallen to 69% at the end of 2008 from 77% at the beginning of the year.

The dollarization process of the Lebanese economy began following the long years of the civil war that ravaged the country in the seventies and eighties of last century.

Lebanon is currently enjoying monetary stability and its banking sector is faring well despite the global financial crisis thanks to the conservative investment policies followed by the central bank and by local banks, she said.

The Beirut Lira Fund II will have an expected annual return of 9.75% and a semi-annual dividend payment. It will be an open-ended fund with a minimum subscription of LBP15 million. And it will mature in five years with the possibility of redemption on a biweekly basis.

This fund will replace the five-year Beirut Lira Fund, which had yielded an annual average return of 10.4%, and which was liquidated last December after it reached its maturity date, Gabriel said.

With the liquidation of this fund that was listed on the Beirut bourse, Bank of Beirut has two remaining listed funds: Beirut Preferred Fund and Beirut Golden Income Fund.

The bank has currently a total of six investment funds, the new fund included.

By Shikrallah Nakhoul, Zawya Dow Jones, +961 1 985757, shikrallah@zawya.com

Copyright (c) 2009 Dow Jones & Co.

(END) Dow Jones Newswires

27-01-09 1033GMT