03 March 2011
BEIRUT: The battle to acquire the entire stake in the Lebanese-Canadian Bank (LCB) intensified Wednesday with bids ranging between $500 million to $600 million.
The bank, which was accused by the U.S. State Treasury Department of involvement in money laundering and links to Hizbullah, suddenly decided to sell all of its shares and exit the Lebanese market.
An informed source told The Daily Star that Central Bank governor Riad Salameh is keen to see a smooth transfer of the bank’s ownership to ease the pressure on the Lebanese banking sector.
“Salameh heard assurances from the U.S. authorities during his visit to Washington that the Lebanese banking sector is not being targeted. The governor proved to the Americans that all of the Lebanese banks are fully complying with strict bank supervision and handle seriously any inquiry about possible money laundry,” the source said.
He added that Salameh and the Central Bank hope that the negotiations to acquire the LCB will be completed within a week at the most. Even if one of the banks made the highest bid, the Central Bank will carefully study the offer before giving its final approval,” the source explained.
Until now, four banks have shown interest in acquiring LCB. Among those that are seriously bidding are Fransabank, Byblos, Banque Libano Franscais (BLF) and Societe General.
The chairmen and general managers of these banks are now in Europe in an attempt to submit their bids and hold talks with the owners of the LCB.
“The race is really tight. Byblos Bank made a very good offer but one bank out of the circle of the five major banks is trying hard to outbid Byblos Bank,” one banker told The Daily Star on condition of anonymity.
Bankers brush off the reports that the United States will apply heavy penalties on Lebanon’s banking sector if the new government refuses to cooperate with the international tribunal which wants to try suspects in the assassination of former Prime Minister Rafik Hariri and other assassinations that took place in Lebanon.
But some bankers confide off the record that the manner in which the file of LCB was opened at this critical time raised some questions about the intentions of the U.S. government.
However, these bankers are also confident that the banking sector will not come under any kind of pressure from the U.S. or the West, noting that Salameh and his team will make sure that no bank violates regulations or tolerates any suspicious deal.
Salameh, who has declined to talk to the press since he came back from the United States, intends to speak briefly Thursday during a TV interview about his discussions in Washington.
The governor will reiterate that there is no imminent danger facing the Lebanese banking sector and that the issue of the LCB will be solved swiftly and without any complications.
But some analysts question what motivated the chairman of the LCB George Abe Jawdeh to suddenly decide to sell his bank.
The bank has $5.88 billion in customer deposits up to 2010, an increase of 19 percent compared to 2009.
The bank’s net profits last year reached $60 million, but what impresses the bidder more is that the LCB has no bad debts or acid assets.
“Any bank which manages to acquire the Lebanese-Canadian Bank in the near future will improve his positions in the local market,” a banking source told The Daily Star.
Lebanon, which enjoys a banking secrecy, has created the Special Investigation Commission to monitor and investigate any suspicious money laundering activity.
For this purpose, on April 20, 2001, the Lebanese Parliament passed Law 318 on fighting money laundering.
This law criminalizes the laundering of proceeds of crimes related to narcotics production, manufacturing and trading, organized crimes, terrorist acts and terrorist financing, illegal arm trade, stealing or embezzling public funds or private funds or their appropriation by fraudulent means, and counterfeiting money or public credit instruments.
The law defines money laundering operations and stipulates fines and imprisonment sanctions imposed on such operations.
Law 318 established the Special Investigation Commission for fighting money laundering as an independent legal entity with judicial status at the central bank, Banque du Liban.
The commission has the exclusive right to lift banking secrecy for use by competent judicial authorities and the Higher Banking Commission.
The commission’s Financial Intelligence Unit receives, analyzes and investigates reports of suspicious transaction and ensures compliance of banks, financial institutions and other reporting entities with pertinent AML regulations.
Copyright The Daily Star 2011.
