|Byblos Bank warns of effects of vacuum
|Byblos Bank chairman Francois Bassil on Tuesday renewed his warning that any delay in the presidential elections will have negative impact on the economy. Speaking at the launch of $200 million of subordinated debt convertible shares, Bassil said that Lebanese banks hold nearly 50 percent of the government's public debt - estimated at $42 billion.
"The value of the Treasury bills have dropped by 10 percent due to the political turbulence and the abnormal situation in the country," Bassil said.
But Bassil said the banking sector is safe and the customer deposits are still very high.
He expressed hope that the political situation will improve in order to change the negative sovereign ratings of some banks.
Moody's rating agency assigned D- grades to four leading banks in Lebanon due to their exposure to public debt.
The firm feared that the government may not be able to implement reforms and reduce the public debt if the political crisis persists in 2008.
Bassil believes that the government has sufficient cash to meet all its needs in 2008.
He added that Paris III donors have injected a lot of money into the Treasury and most of this money has still not been used.
He urged the government to sell troubled Electricite du Liban to the private sector to cut mounting losses.
Meanwhile, Bassil also commented on the new $200 million subordinated issue.
"The tenor of this subordinated debt is 5 years during which the subscribers can ask every 3 months to convert their subordinated debts into Byblos Bank common shares for the price of $2.25 per share," he said.
He underlined the importance of this transaction which is considered groundbreaking.
Byblos said that this is the first and only capital market transaction by a Lebanese bank on the international capital market during 2007.
"It is the first time that a Lebanese bank issues a debt instrument convertible into common shares upon the approval of monetary and supervisory authorities," Byblos said in a statement.
It added that the transaction took place at a very difficult moment for Lebanon, showing confidence in Byblos Bank and the Lebanese banking sector in general, despite the adverse political circumstances in the country.
Bassil said Byblos Bank was able to attract leading international institutional investors as well as local investors.
Bassil also noted that "the transaction was approved by a substantial majority of Byblos Bank shareholders (81.41 percent) with no shareholder voting against it.
The Daily Star