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French Version

Lebanese banks see increase in assets

But the growth was the lowest in the region

Lebanon's banking sector recorded a 2.5 percent increase in its assets during 2005, the lowest rate in comparison to the increases in other Arab countries.

Despite the negative ramifications of the assassination of former Premier Rafik Hariri and the decline in the country's economy, the sector turned a a profit and the $2 billion withdrawn from banks after the assassination, found its way back by the end of 2005.

Head of the Union of Arab Banks, Joseph Torbey made this announcement Friday during a news conference.

The sector also increased its regional presence during the past year as Bank Audi expanded to Syria and Jordan, Byblos Bank to Algeria and Sudan and Fransabank to Algeria.

According to Torbey, the Arab economy has witnessed unprecedented growth over the last few years caused by the increase in oil prices, which reached $35 per barrel in 2004 and $50 per barrel in 2005 and approximately $68 currently.

This has led to excess liquidity in the GCC countries, which affects the banking sector across the whole Arab world.

"Growth in the oil industry has positively affected the economy in the Arab world. However, the political situation in Lebanon following Hariri's assassination is discouraging Arab and foreign capital from investing here."

Torbey said the "inflamed political speech that does not calm or promote stability in the country is driving away investment capital."

"We are afraid we will lose this opportunity for attracting such capital," said Torbey.

The banker said he did not expect political developments to obstruct the growth of the sector which is "immune to internal political developments and has established a good reputation for itself that the figures prove."

Lebanon's bank deposits in 2005, for instance, were $11.7 billion more than Kuwait's bank deposits.

Excess liquidity in GCC countries is estimated to reach a new high of $100 billion in 2005, compared to $30 billion in 2004. Overall economic growth in GCC countries

also increased during 2005 and almost doubled reaching a new high of 10 percent.

The growth in the Arab banking sector reached a new level of 20 percent in 2005 compared to 13.5 percent in 2004. The total amount of assets in Arab banks amounted to more than a $1 trillion by the end of 2005, compared to $883 billion in 2004.

The growth in the banking sector is linked to the development policies adopted by Arab banks and their commitment to international banking and financial standards, said Torbey.

This development policy has helped the banking sector to grow beyond the economic sector as the total deposits in the Arab banks are 130 percent more than Arab Gross Domestic Product.

The banking sector also witnessed different transformations and developments in 2005 according to Torbey.

He noted that acquisitions, mergers and privatization operations increased in variouscountries, especially Egypt which witnessed eight mergers and seven privatizations.

He also said most banks updated and modernized their legal frameworks, especially in Syria (four private Arab banks opened) and Iraq (five banks were created).

Torbey urged Arab banks to compete for investment opportunities available in the Arab market among Arab and foreign investors and to expand the investment and commercial exchange sectors in Arab countries.

He also called upon Arab countries to adopt a series of procedures to improve local investment opportunities in order to attract the large amounts of capital available in the region.

Beirut 23-01-2006
Nada Bakri
The Daily Star

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