Lebanon's big banks have cut their lending exposure to war-ravaged Syria by as much as 60 per cent in a bid to limit the economic contagion.
Lebanese lenders have collectively reduced the size of their loan portfolio from US$5 billion (Dh18.36bn) to $2bn, said the central bank governor Riad Salameh in an interview with The National.
"Since the beginning of the Syrian crisis we have run stress tests on the Lebanese banks and the Syrian economy," he said.
"The necessary general provisions were constituted and their exposure there has also diminished by 60 per cent. Some of the banks closed the loan books because clients have paid their dues, some of the banks have sold the loans to others - all of which has contributed to reduction in their exposure."
Profits from Lebanese banks operating in Syria fell by more than 45 per cent last year to 14.5 billion Syrian pounds (Dh752.9 million), according to an economic report published by Byblos Bank.
Bank of Syria and Overseas registered a 92 per cent decline in annual profits for 2012. Syria Gulf Bank posted a 97 per cent drop in net income, while Byblos Bank said its profits fell 94.7 per cent.
Bank Audi Syria and Fransabank Syria said profits fell 95.1 per cent and 62.1 per cent respectively, while Banque Bemo Saudi Fransi registered a 13.4 per cent decline in profit.
"We have seen a rise in defaults," said Sultan Al Zobi, the chief executive of the International Bank for Trade and Finance (IBTF), whose majority shareholder is Jordan's Housing Bank for Trade & Finance.
"At our bank, it counts for about 15 per cent. The slowdown in the economic sectors have had a profound impact on the banks. Many of Syria's factories have been closed. We will have collective impairements, general provisions, for the sake of being conservative for the future."
Mr Al Zobi said he did not expect IBTF to register a profit at the end of the year.
Syria's 14 private lenders, considered the crown jewels of the president Bashar Al Assad's economic modernisation plan, are struggling with a mismatch of assets and liabilities following a 25 per cent decline in the value of the country's currency since May 2011.
Banking transactions such as trade finance or corporate lending have taken a big hit, and deposits and withdrawals continue.
Before the uprising that began two years ago, many Lebanese banks operating in Syria were hoping to expand operations, Nassib Ghobril, the chief economist at Byblos Bank, said last November. "But since the turmoil, their focus has become risk management. Lenders are in wait-and-see mode, and paying attention to how they can minimise the damage and losses until the conflict ends."
Trading on the Damascus Securities Exchange (DSE) has almost halted in recent months as violence escalated in the capital and other cities across Syria. But exchange officials say they remain committed to offering investors a place to trade their holdings.
There are 20 stocks listed on the DSE, 12 of which are banks, with the rest from the insurance, services, industrial and agriculture sectors.
The DSE General Index has lost more than half of its value since the uprising began. It traded at 1,523.14 points on March 15, 2011, the start of the uprising, and has since fallen to 784.92.
The IMF has not provided figures on the Syrian economy since the start of violence.
halsayegh@thenational.ae
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Jordan cabinet changes
In
- Raed Mozafar Abu Al Saoud, Minister of Water and Irrigation
- Dr Bassam Samir Al Talhouni, Minister of Justice
- Majd Mohamed Shoueikeh, State Minister of Development of Foundation Performance
- Azmi Mahmud Mohafaza, Minister of Education and Minister of Higher Education and Scientific Research
- Falah Abdalla Al Ammoush, Minister of Public Works and Housing
- Basma Moussa Ishakat, Minister of Social Development
- Dr Ghazi Monawar Al Zein, Minister of Health
- Ibrahim Sobhi Alshahahede, Minister of Agriculture and Minister of Environment
- Dr Mohamed Suleiman Aburamman, Minister of Culture and Minister of Youth
Out
- Dr Adel Issa Al Tawissi, Minister of High Education and Scientific Research
- Hala Noaman “Basiso Lattouf”, Minister of Social Development
- Dr Mahmud Yassin Al Sheyab, Minister of Health
- Yahya Moussa Kasbi, Minister of Public Works and Housing
- Nayef Hamidi Al Fayez, Minister of Environment
- Majd Mohamed Shoueika, Minister of Public Sector Development
- Khalid Moussa Al Huneifat, Minister of Agriculture
- Dr Awad Abu Jarad Al Mushakiba, Minister of Justice
- Mounir Moussa Ouwais, Minister of Water and Agriculture
- Dr Azmi Mahmud Mohafaza, Minister of Education
- Mokarram Mustafa Al Kaysi, Minister of Youth
- Basma Mohamed Al Nousour, Minister of Culture
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Our family matters legal consultant
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Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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Sukuk are Sharia-compliant financial certificates issued by governments, corporates and other entities. While as an asset class they resemble conventional bonds, there are some significant differences. As interest is prohibited under Sharia, sukuk must contain an underlying transaction, for example a leaseback agreement, and the income that is paid to investors is generated by the underlying asset. Investors must also be prepared to share in both the profits and losses of an enterprise. Nevertheless, sukuk are similar to conventional bonds in that they provide regular payments, and are considered less risky than equities. Most investors would not buy sukuk directly due to high minimum subscriptions, but invest via funds.
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(All matches start at 2pm UAE)
1st Test Lord's, London from Thursday to Monday
2nd Test Nottingham from July 14-18
3rd Test The Oval, London from July 27-31
4th Test Manchester from August 4-8
Full list of Emmy 2020 nominations
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Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
