Lebanon’s financial prosecutor freezes assets of 20 banks

In this Jan. 14, 2020 file photo, anti-government protesters smash bank widows, during ongoing protests against the Lebanese central bank's governor, on Hamra Street, in Beirut, Lebanon. (AP)
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Updated 05 March 2020

Lebanon’s financial prosecutor freezes assets of 20 banks

BEIRUT: Lebanon’s financial prosecutor has frozen the assets of 20 Lebanese banks, their top bosses and board members, state media and judicial sources said on Thursday.
Judge Ali Ibrahim gave notice to the central bank and the banking association, state news agency NNA said without naming the banks or giving details of the assets.
The move to freeze assets is part of an ongoing investigation, a senior judicial source said without elaborating.
The source said the decision involved some of Lebanon’s biggest banks, including Blom Bank, Bank Audi , Byblos Bank, Bank of Beirut and SGBL (Societe Generale De Banque Au Liban SAL).
The Association of Banks in Lebanon (ABL), which represents the nation’s lenders, could not be reached for immediate comment.
Local banks are at the heart of a financial crisis crippling the country as the clock runs down on its looming debt maturities, including a $1.2 billion Eurobond due on March 9.
The government will meet on Saturday to take a decision, after Parliament Speaker Nabih Berri said a majority of MPs oppose paying even if that leads to default, compounding doubts over whether Lebanon will meet the March repayment.
The economic and financial strains came to a head last year as capital inflows slowed and protests erupted against a political elite that has dominated Lebanon since the 1975-1990 civil war and steered it into crisis.
The crisis is rooted in decades of waste and corruption which landed the country with one of the world’s biggest public debt burdens. Domestic banks, which for years funneled deposits to the state, hold the bulk of the sovereign debt.
Lebanon is probing the sale of Eurobonds by local banks to foreign investors though the practice is not illegal, a judicial source said last month.
Berri, one of the country’s most influential leaders, blamed local banks on Wednesday for diluting the local holding. Critics say this has weakened Lebanon’s position in talks with foreign bondholders.
Some politicians have criticized the banking sector recently as public anger turned to the banks, which have severely curbed people’s access to their savings and blocked transfers abroad.
The head of the banking association, Salim Sfeir, has said those measures aim to keep Lebanon’s wealth in the country.
Sfeir said on Wednesday that the sector was being targetted with rumors and that banks had suffered losses to secure liquidity.
The central bank has asked banks to review transfers of funds abroad by politicians and government employees between October and December.
The government separately approved a draft law on Thursday aimed at lifting banking secrecy. The information minister said the law, which will go to parliament, would apply to ministers, MPs and a range of public officials.


Make or break days for global oil ahead of OPEC crunch meeting

Updated 08 April 2020

Make or break days for global oil ahead of OPEC crunch meeting

  • OPEC, led by Saudi Arabia, were on Thursday scheduled to take part in virtual discussions with non-OPEC members, led by Russia, about a possible deal to revive the OPEC+ alliance
  • On Friday, energy ministers from the G20 nations, under the presidency of Saudi Arabia, will convene in another digital forum that will bring in the third part of the global oil equation – the US

DUBAI: The global energy world, in the midst of crisis as demand slumps to unprecedented levels due to the coronavirus disease (COVID-19) pandemic, faces two days that could make – or break – the oil industry for months to come.
Leading producers from the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, were on Thursday scheduled to take part in virtual discussions with non-OPEC members, led by Russia, about a possible deal to revive the OPEC+ alliance that fell apart in Vienna at the beginning of last month.
Then, on Friday, energy ministers from the G20 nations, under the presidency of Saudi Arabia, will convene in another digital forum that will bring in the third important part of the global oil equation – the US, currently the biggest oil producer in the world.
If no deal is reached from the two days of oil summits, the immediate prospect looms of a further fall in crude prices and, with global storage facilities already filling rapidly, the possibility of major exporters “shutting in” oil fields, jeopardizing future production.
Energy experts say the purpose of the meetings is two-fold: To reach agreement on how to limit the vast quantities of oil that are still being produced even as demand collapses; and to present some kind of united front in geopolitical terms in the face of the biggest economic recession since the 1930s.
The most visible immediate sign of any success from the meetings will be an increase in the price of crude oil on global markets. Brent crude, the Middle East benchmark, has lost nearly half its value in the past month.
The first aim – to try to balance oil supply and demand – is the more difficult. Global demand has fallen by at least 20 per cent from the usual daily consumption of around 100 million barrels, oil economists have calculated.
But, following the collapse of the OPEC+ deal that was putting a lid on supply, all producers have been pumping more crude. Saudi Arabia is producing more than 12 million barrels per day (bpd), a bigger volume than at any time in its history. All OPEC members, as well as Russia, have said they will increase output.
In this stand-off, US President Donald Trump intervened last week to say that he had spoken to Saudi and Russian leaders and that he “expected” a cut of 10 million, possibly even 15 million, bpd.
That looks like wishful thinking. For one thing, it would not rebalance markets. Anas Al-Hajji, managing partner of US-based Energy Outlook Advisers, said: “The amount of the cut is relatively small given the major drop in demand.”
There are also some difficult relationships to smooth over in the OPEC+ alliance. Saudi Arabia and Russia exchanged angry statements last weekend, each accusing the other of starting the oil price war. Iran, with big reserves but hampered by US sanctions from exporting in large quantities, said that it might not take part in the conference.
The choreography of the two meetings also presents hurdles. The US will not be present at the OPEC+ meeting, but American Secretary of Energy Dan Brouillette said he would take part in the G20 event.
Because it is a free-market industry, America cannot order its oil producers to reduce output, but most analysts are agreed any attempt to rebalance global supply would be impossible without a US contribution.
By going first, Saudi Arabia and Russia are “playing blind” without knowing what the Americans are thinking. Neither would want to agree big price-restoring cuts only for US producers – under big financial pressure at current levels – to swoop back into the market.
This week there have been some signs that the Americans are considering their own versions of cutbacks. The biggest US company, Exxon Mobil, said it would reduce capital expenditure on future projects by 30 percent; the US Energy Information Administration said oil production would fall by nearly 1 million bpd this year, in response to falling demand and financial pressures.
But even if the Saudis and Russians cut substantially alongside other big OPEC producers such as the UAE, and the Americans enter a long-term pattern of falling demand, it is still hard to see how cuts could reach the 10 million barrels Trump “expects,” let alone 15 million.
J. P. Morgan, the big US investment bank, said that it expects OPEC+ to come up with combined cuts of about 4.3 million barrels, most of that coming from Saudi Arabia, Russia and the UAE. “If it’s 4.3 million it only puts off the day when global storage gets filled completely,” said Robin Mills, CEO of Qamar Energy consultancy.
Storage facilities are nearly at the brim. Malek Azizeh, director of the premium facilities at the Fujairah Oil Terminal in the UAE, joked that he was going to hang a sign on the terminal gates: “Thanks, but no tanks.”