BEIRUT: Credit Libanais, one of Lebanon’s leading banks, plans to expand in the Middle East and Europe as part of efforts to achieve higher growth, the bank’s chairman, Joseph Torbey, said Thursday.
“On a regional basis, Credit Libanais has recently succeeded in obtaining a banking license to operate through two branches in the Republic of Iraq and has an eye on additional expansions inside Europe,” Torbey told The Daily Star in an exclusive interview.
The latest expansion efforts come after EFG-Hermes purchased a 60 percent share in the bank in August of last year, a cash injection of $542 million. Under the purchase agreement EFG-Hermes has the option to buy an additional 25 percent interest in the Credit Libanais Group over the next two years, giving it a controlling majority, according to sources.
“The bank’s corporate priority centers primarily on maintaining and improving its strong retail image in the market, spread over a domestic network of 65 branches, a branch in Limassol, Cyprus, a fully fledged bank in the Kingdom of Bahrain, a representative office in Montreal, Canada and a joint-venture bank in Dakar, Senegal,” Torbey said.
Major Lebanese banks already operate in 31 countries in Middle East, Asia, Africa and Europe and plan to reach other countries to diversify income.
Torbey added that in an attempt to entrench its position as one of the leading banks in Lebanon, Credit Libanais plans to expand its market positioning and operations in Lebanon by broadening its branch network on the scale of one branch every six months.
The chairman, who is also the president of the Association of Banks in Lebanon, stressed that his bank may eventually increase its capital to help achieve its expansion goal.
“Credit Libanais has successfully increased its capital by some $100 million in May 2006 and may consider additional increases in the near to medium term to preserve its robust standing in the banking sector, finance its regional expansion program, if needed, and stay abreast of the different phasing of required capital adequacy and capitalization levels set forth by the newly promulgated Basel III requirements,” he said.
But the bank has no intention to list its shares on the Beirut Stock Exchange in the foreseeable future.
“At present, and as the repercussions of the global financial crisis are still lingering, added to the prevailing regional turmoil, the listing of Credit Libanais’ shares is still on hold, awaiting appropriate and suitable market conditions,” Torbey explained.
He also brushed off media suggestions that other Lebanese banks may be the target of the U.S. Treasury, emphasizing that banks are implementing tougher measures to protect themselves and their customers.
“The Lebanese Central Bank has always been keen on reinforcing the role of the banking sector as the backbone of the Lebanese economy, and doing this through continuously promulgating stiff regulations and new tools in an attempt to ensure the adherence of the Lebanese banking sector to international norms, including those pertaining to money laundering,” Torbey said.
In an attempt to allay the fears of some depositors and investors, he said that the case of the Lebanese-Canadian Bank is an isolated one, and is by no means an indicator of the status of the Lebanese banking sector as a whole. On the contrary, Torbey said, the sector has been the subject of praise from international agencies over the last couple of years for its stability and adherence to international norms.
“In addition, we consider that the case of the Lebanese-Canadian Bank was handled in an efficient and brisk manner and that the offered solution was satisfactory to all concerned parties,” Torbey said.
He was also upbeat about the future of Lebanese banks despite the turmoil in some Arab countries. Torbey predicted major bank mergers would occur in Lebanon in the future, following the acquisition of LCB by SGBL.
“Consolidation will certainly water down some of the main challenges Lebanese banks may face in the coming period, namely the cut-throat competition and saturated market, and hence contribute to the welfare of the sector, as a result of larger economies of scale and more endemic synergies. Consolidation is expected to gain momentum in the upcoming period, particularly between larger banks (Alpha Group of banks) and smaller scale banks (Delta Group of banks) in tandem with banks’ requirements to conform to Basel III standards pertaining to capital adequacy and capitalization,” he said.
Consolidated banking sector profits grew by an astounding 37.75 percent to $1.642 billion in 2010, up from $1.192 billion in 2009. On the balance sheet front, total consolidated assets of commercial banks in Lebanon posted a stellar 11.86 percent annual growth to $128.92 billion as at the end of December, up from $115.25 billion in 2009.
