01 September 2003

Authorities ‘will not rest’ till Al-Madina settles debts

The banking authorities will not rest until the depositors of the troubled Al-Madina Bank get their last penny, Walid Alameddin, the chairman of the Banking Control Commission, said Wednesday. “We want to make sure that the owners of the bank pay back all the money they owed to depositors. [Authorities ‘will not rest’ till Al-Madina settles debts - Troubled bank gains new temporary chief (Daily Star)]

We expect the depositors to get their money back in due course,” Alameddin told The Daily Star. He added that the Central Bank has appointed a temporary general manager for the bank to ensure that the money is restored to depositors. Adnan Abu Ayyach and his brother Ibrahim, the owners of Al-Madina Bank, have been summoned by the attorney general’s office after the bank suffered a liquidity crunch of nearly $350 million.

The Banking Control Commission, which supervises the performance of all banks operating in Lebanon, sent a full report to the attorney’s office a few months ago, detailing the numerous violations the owners of Al-Madina Bank committed. But Alameddin declined to disclose further details about the bank.
“Our main concern is to retrieve every penny. If this is done, then there is no need to liquidate the bank,” Alameddin stressed.

But some bankers expressed doubt as to whether the owners of Al-Madina Bank will be able to raise $350 million even if all the properties the family owns are sold.

The assets of the Abu Ayyach family, along with leading investors allegedly involved in the financial scam such as Taha Qulilat and his brother and sister, were seized by the Central Bank. Sources said the Central Bank has already liquidated some $50 million worth of assets in the form of property.

Some leading investors and management questioned by the authorities may find themselves implicated in money laundering, mismanagement of funds and failing to implement basic accounting practices.

Alameddin said the banking commission is already working closely with all banks to implement the Basel II requirements in an attempt to improve risk management. He added that banks are supposed to implement the requirements of Basel II before 2004.

Commercial banks are expected to have a better risk management system as of September this year. “We are trying to protect our banks from any foreseeable risk,” Alameddin said. He added that Basel II may also encourage bank consolidations in the future. “Even some of the small banks will be able to apply the requirements of Basel II if there is a desire to do so.”
Alameddin said that Basel II does not necessarily require increasing the provisions for non-performing loans. “In some cases, the provisions for loans may be lower if the credit risks are not high.”

Basel II calls on the banks to keep all the credit files of their clients, from both the private and public sectors, and urges the banks to apply a unified supervisory system and to update their files at least once a year.

The Swiss-based Basel committee issues recommendations for banks and international financial institutions on how they can tighten supervision and reduce credit risks.

In Lebanon, the Central Bank and the Banking Control Commission have applied several laws to reduce the exposure of possible defaults on the payment of debts.

Included in the measures applied by banks are raising the capital adequacy ratio to 12 percent and allocating more provisions for non-performing loans.

The high provisions for bad loans have affected to some extent the profitability of banks, but have also reduced the risk of default payments. He added that Basel II will help improve the credit ratings of Lebanese banks. “Some of the banks in the Arab states are rated better than their own governments,” Alameddin said.
International rating agencies Standard & Poor and Moody’s believe that the performance of local banks may be affected by the government’s fiscal deficit.

But recently, the rating agencies have given leading banks better credit ratings than they gave the government. Alameddin believes that assets of local banks have the potential to reach over $100 billion if the government passed the draft law on banking consolidation.

He also said that better risk management does not mean that banks will reduce their lending to the private sector. “Banks are required to assess the credit ratings of all their clients and improve the efficiency of their management,” he said.

Alameddin also commented on Paris II and its impact on banks, saying: “There were good results from Paris II as interest rates on deposits fell considerably. But we want banks to lower rates on loans to stimulate the economy.”-(DStar)

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Lebanon Time-Line

Introducing Lebanon

Coolly combining the ancient with the ultramodern, Lebanon is one of the most captivating countries in the Middle East. From the Phoenician findings of Tyre (Sour) and Roman Baalbek's tremendous temple to Beirut's BO18 and Bernard Khoury's modern movement, the span of Lebanon's history leaves many visitors spinning. Tripoli (Trablous) is considered to have the best souk in the country and is famous for its Mamluk architecture. It's well equipped with a taste of modernity as well; Jounieh, formerly a sleepy fishing village, is a town alive with nightclubs and glitz on summer weekends.

With all of the Middle East's best bits - warm and welcoming people, mind-blowing history and considerable culture, Lebanon is also the antithesis of many people's imaginings of the Middle East: mostly mountainous with skiing to boot, it's also laid-back, liberal and fun. While Beirut is fast becoming the region's party place, Lebanon is working hard to recapture its crown as the 'Paris of the Orient'.

The rejuvenation of the Beirut Central District is one of the largest, most ambitious urban redevelopment projects ever undertaken. Travellers will find the excitement surrounding this and other developments and designs palpable - and very infectious.

Finally, Lebanon's cuisine is considered the richest of the region. From hummus to hommard (lobster), you'll dine like a king. With legendary sights, hospitality, food and nightlife, what more could a traveller want?

Introducing Beirut

What Beirut is depends entirely on where you are. If you’re gazing at the beautifully reconstructed colonial relics and mosques of central Beirut’s Downtown, the city is a triumph of rejuvenation over disaster.

If you’re in the young, vibrant neighbourhoods of Gemmayzeh or Achrafiye, Beirut is about living for the moment: partying, eating and drinking as if there’s no tomorrow. If you’re standing in the shadow of buildings still peppered with bullet holes, or walking the Green Line with an elderly resident, it’s a city of bitter memories and a dark past. If you’re with Beirut’s Armenians, Beirut is about salvation; if you’re with its handful of Jews, it’s about hiding your true identity. Here you’ll find the freest gay scene in the Arab Middle East, yet homosexuality is still illegal. If you’re in one of Beirut’s southern refugee camps, Beirut is about sorrow and displacement; other southern districts are considered a base for paramilitary operations and south Beirut is home to infamous Hezbollah secretary general, Hassan Nasrallah. For some, it’s a city of fear; for others, freedom.

Throw in maniacal drivers, air pollution from old, smoking Mercedes taxis, world-class universities, bars to rival Soho and coffee thicker than mud, political demonstrations, and swimming pools awash with more silicone than Miami. Add people so friendly you’ll swear it can’t be true, a political situation existing on a knife-edge, internationally renowned museums and gallery openings that continue in the face of explosions, assassinations and power cuts, and you’ll find that you’ve never experienced a capital city quite so alive and kicking – despite its frequent volatility.