3,000 bankers in Lebanon have lost their jobs since 2019 crisis

3,000 bankers in Lebanon have lost their jobs since 2019 crisis
A view of Lebanon's Central Bank building in Beirut. (Reuters)
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Updated 17 June 2021

3,000 bankers in Lebanon have lost their jobs since 2019 crisis

3,000 bankers in Lebanon have lost their jobs since 2019 crisis
  • Banks are facing their biggest challenge since the 1975-1990 civil war
  • De facto capital controls are in place with depositors locked out of most of their savings

BEIRUT: Lebanon’s banks, which once powered the economy by sucking in billions of dollars of deposits from abroad, are shedding staff, watching loan books shrink and chasing liquidity to stay afloat.
About 3,000 bankers, or more than 10 percent of the banking industry workforce, have resigned or lost their jobs so far since a financial crisis flared up in late 2019 — and the numbers keep rising, four senior bankers told Reuters.
De facto capital controls are in place, depositors are locked out of most of their savings and lending to the private sector has plummeted. In April, bank loans had fallen by 25 percent year on year to $33 billion, according to a Byblos Bank note.
“The sector is dead. It doesn’t lend, it doesn’t make profits,” said one of the bankers, who requested anonymity.
Banks are facing their biggest challenge since a 1975-1990 civil war, a conflict which by some measures gave the lenders a smaller hangover. This crisis has left the industry nursing losses worth $83 billion, according to a government report last year, dwarfing Lebanon’s 2019 economic output of $55 billion.
“The crisis in Lebanon essentially is first of all a banking collapse,” said Toufic Gaspard, an economist who has worked as an adviser at the IMF and as an adviser to a former finance minister.
The financial services sector in Lebanon, which once fashioned itself as the Switzerland of the Middle East, accounted for nearly 9 percent of gross domestic product in 2018.
Supported by a central bank that offered attractive interest rates for fresh dollars to service the nation’s exploding debt, banks drew in deposits, particularly from Lebanon’s diaspora. When that financial house of cards collapsed in 2019, the economy imploded, hammering the banking system.
Salim Sfeir, chairman of the Association of Banks in Lebanon (ABL), said banks were now surviving partly thanks to liquidity generated by “deleveraging,” as many Lebanese moved money out of banks to repay individual and corporate debt.
“In normal circumstances lending is banks’ business, but in such circumstances this gives us liquidity, it gives us fresh air to continue surviving during the crisis,” said Sfeir, who is also chief executive of Bank of Beirut.
The industry, which had employed about 28,000 before the crisis, now had about 25,000, he estimated.
The three other senior bankers gave similar numbers for job losses in the sector, adding that the figure continued to grow.
Most job losses were in retail banking, serving what were traditionally core banking businesses such as attracting deposits or selling loans to small and medium enterprises that have lost steam or simply collapsed, the sources said.
Job losses have accumulated amid a political deadlock which has left Lebanon without a new government, after the cabinet resigned in the aftermath of a massive Beirut port blast last year that ripped through a swathe of the capital.
Political sclerosis has delayed a deal with the International Monetary Fund, a vital element in a wider rescue plan to fix Lebanon’s broken financial and economic system.
Bankers and analysts said any restructuring of Lebanon’s 40 or so banks should be part of such a comprehensive plan.
“There’s no strategy for the banking sector. We’re operating at zero visibility,” another of the senior bankers said, adding that banks were only able to function in “continuity mode.”
The full extent of bank losses would only become clear when the government restructures its mountain of debt, ratings agency S&P said, after the government defaulted last year.
S&P said the cost of restructuring the banking system could range from $23 billion to $102 billion.
The central bank instructed banks to raise their capital defenses by 20 percent by the end of February and requested banks to boost liquidity by 3 percent with their corresponding banks.
ABL’s Sfeir said banks had completed the increase.
“The other guideline was to increase foreign liquidity,” he said, adding that this was “more difficult because you have to liquidate some of your foreign assets, your depositors will have to repatriate some of their overseas deposits.”
“This is why it’s taking some time,” he said.


Oil prices rise over 1 percent as fresh virus curbs threaten demand recovery


Oil prices rise over 1 percent as fresh virus curbs threaten demand recovery

Updated 06 August 2021

Oil prices rise over 1 percent as fresh virus curbs threaten demand recovery


Oil prices rise over 1 percent as fresh virus curbs threaten demand recovery


LONDON: Oil prices rose about 1 percent on Thursday on increasing Middle East tensions, but fresh movement restrictions imposed by countries to counter a surge in COVID-19 cases threatened the demand recovery.

Brent crude oil futures rose 78 cents, or 1.1 percent, to $71.16 a barrel, after earlier dipping below $70 for the first time since July 21.

US West Texas Intermediate (WTI) crude futures traded 80 cents, or 1.2 percent, higher at $68.95 a barrel.

The growing regional tensions come as nuclear talks between Iran and Western powers that would ease sanctions on Tehran’s oil exports appear to have stalled.

“With tensions brewing among Iran and world powers over last week’s drone attack, it seems nuclear deal talks will be lengthy and unlikely to provide imminent sanction relief for Iran,” said Edward Moya, senior analyst at OANDA.

Offsetting the geopolitical tensions, concerns over the recovery of global oil demand grew amid a surge in coronavirus cases.

Both benchmarks fell for a third day in a row to a two-week low on Wednesday, partly due to the spread of the coronavirus delta variant.

Japan is poised to expand emergency restrictions to more prefectures while China, the world’s second-largest oil consumer, has imposed curbs in some cities and canceled flights, threatening fuel demand.

“China is now facing its most challenging COVID-19 crisis since the initial outbreak was brought under control,” analysts at consultancy FGE said in a note on Thursday.

In the US, the world’s biggest oil consumer, COVID-19 cases hit a six-month high with more than 100,000 infections reported on Wednesday, according to a Reuters tally.

Analysts at investment bank UBS, however, said they expect oil prices to resume their upward trend despite pandemic concerns, projecting Brent crude will trade between $75 and $80 per barrel in the second half of 2021.


Saudi Ports Authority records 
growth in activities in first half of 2021

Saudi Ports Authority records 
growth in activities in first half of 2021
Updated 06 August 2021

Saudi Ports Authority records 
growth in activities in first half of 2021

Saudi Ports Authority records 
growth in activities in first half of 2021

RIYADH: The Saudi Ports Authority (Mawani) announced on Thursday that all areas of its activities had seen growth during the first half of 2021.

The announcement reflects the Kingdom’s economic recovery from the COVID-19 pandemic.

In terms of containers, Mawani handled 3.6 million TEU (a measure of volume equivalent to a 20-foot cargo container) during the first half of the year — a jump of 5.18 percent year-on-year. Transshipment containers increased by 24.49 percent to 1.4 million TEU, while it handled a total of 138 million tons of cargo.

The number of passengers grew by 0.61 percent year-on-year to 288,000, and Mawani handled 429,000 imported cars.

BACKGROUND

In July, Saudi Ports Authority announced investment opportunities in partnership with the private sector to develop and operate multipurpose terminals in eight of the nation’s ports.

The authority also recorded an increase in the number of ships received at the Kingdom’s ports, which received 6,037 vessels — an increase of 6.6 percent over the same period last year.

Mawani launched four shipping lines in 2020 to help increase Saudi ports’ connectivity with their international counterparts.

In July, the authority announced investment opportunities in partnership with the private sector to develop and operate multipurpose terminals in eight of the nation’s ports, in line with the objectives of Saudi Vision 2030, which include making the Kingdom a leading global logistics platform and connecting hub.

The build-operate-transfer (BOT) contracts on offer are for terminals in Jeddah Islamic Port, King Abdulaziz Port in Dammam, Ras Al-Khair Port, Jizan Port, Yanbu Commercial Port, King Fahad Industrial Port in Jubail, King Fahad Industrial Port in Yanbu, and Jubail Commercial Port.

One of the goals of Saudi Vision 2030 is for transport and logistics to contribute 10 percent of the country’s GDP by that date, up from its current 6 percent, following the implementation of the Kingdom’s new strategy for the sector.

 


Pent-up travel demand helps Lufthansa halve losses


Pent-up travel demand helps Lufthansa halve losses

Updated 05 August 2021

Pent-up travel demand helps Lufthansa halve losses


Pent-up travel demand helps Lufthansa halve losses


FRANKFURT: German airline Lufthansa said on Thursday it halved its losses in the second quarter compared to a year ago, as travel restrictions eased over the coronavirus pandemic and passengers returned.

Europe’s largest airline group said its net loss between April and June came in at €756 million ($890 million) compared with 1.5 billion euros last year, when travel worldwide was halted by COVID-19.

Increased bookings saw the company record a positive cash flow in the second quarter for the first time since the start of the health crisis.

“We have been able to stop the outflow of funds in the current phase of reviving our business and generate a positive cash flow for the first time since the beginning of the pandemic,” said CEO Carsten Spohr.

“In June alone, the number of bookings was more than twice as high as at the beginning of the quarter,” the company said.

Lufthansa said it still expected to operate at 40 percent of its pre-crisis capacity this year, leaving its projection unchanged.

Flight capacity will increase to 50 percent in the third quarter, on the back of continued recovery in demand in Europe, increased business travel and the opening up of further markets, such as North America.

Following an announcement from the US that the country would begin to allow vaccinated foreigners to travel to the country at some point, Spohr said in a conference call that Lufthansa was planning on the change to be implemented at the “end of September.”

In terms of the risk posed to the business by the spread of the more-infectious delta variant, Spohr said that the progress of the vaccination campaign was “more important” for the sector.

As a result, Lufthansa expects to book positive operating, or underlying, profit later this year on its path back into the black.

Earnings before interest, tax, depreciation and amortization (EBITDA), a yardstick closely watched by analysts, was still severely negative in the second quarter, with the company registering a loss of about €400 million in the second quarter.

Lufthansa, which also includes Austrian, Swiss and Brussels Airlines, was saved from bankruptcy last June by a German government bailout.

Lufthansa’s chief financial officer Remco Steenbergen said the company was discussing with investors about how to raise the capital needed to pay down the state aid the group received, and said the final figure would be “significantly less” than the €3 billion to €4 billion previously mooted.

The company is in the throes of a painful restructuring to slash costs that will include thousands of job cuts, with 30,000 already axed since the start of the pandemic.

As part of the recovery plan, the airline will slash its current fleet of 800 aircraft to 650 by 2023.


JP Morgan launches bitcoin fund; Uruguay mulls letting businesses accept cryptos

JP Morgan launches bitcoin fund; Uruguay mulls letting businesses accept cryptos
Updated 05 August 2021

JP Morgan launches bitcoin fund; Uruguay mulls letting businesses accept cryptos

JP Morgan launches bitcoin fund; Uruguay mulls letting businesses accept cryptos

DUBAI, RIYADH: The second-largest cryptocurrency after bitcoin, Ethereum, recorded gains early on Thursday as investors anticipate a major upgrade that is aimed to improve and optimize the digital currency.

Its price was up by around 8 percent over the last 24 hours, according to Forbes.

Ether traded at $2,687.71 at 5 p.m. Riyadh time on Thursday, according to data from Coindesk.

Bitcoin traded lower, falling by 2.78  percent to $38,035.85.

In other developments, a report by Pymnts and Bitpay showed consumers in the US are increasingly interested in using cryptocurrencies for their payments.

“The report analyzes a census-balanced survey of 8,008 US consumers who were current and former cryptocurrency owners and cryptocurrency nonowners between Feb. 8 and Feb. 23, 2021,” the report said, cited by Bitcoin.com.

It found that 93 percent of crypto users would consider making purchases using cryptocurrency, while 59 percent of non-crypto owners said they are interested in using it for their purchases in the future.

In Europe, French asset manager Melanion Capital received regulatory approval to launch an exchange-traded fund (ETF) tracking bitcoin price for investors across the region.

Another act to regulate the industry is from a senator in Uruguay who introduced a bill to allow businesses to accept cryptocurrencies as payments.

The bill will provide “legal, financial and fiscal security in the business derived from the production and commercialization” of crypto, CoinDesk has reported.

JP Morgan has launched an in-house bitcoin fund, and has begun pitching it to private bank clients.

Google’s new ad policy for financial products and services has gone into effect – and it allows some crypto ads.

In the East, Hong Kong is seeing a rise in crypto-related crimes, according to Bitcoin.com, with authorities saying it could be due to the increasing popularity of crypto investments.

But in China, a global leader in the crypto scene, these crimes have decreased significantly in recent years.


Saudi Maaden shifts to profitability in the second quarter, year-on-year

Saudi Maaden shifts to profitability in the second quarter, year-on-year
Updated 05 August 2021

Saudi Maaden shifts to profitability in the second quarter, year-on-year

Saudi Maaden shifts to profitability in the second quarter, year-on-year

RIYADH: The Saudi Arabian Mining Co. (Maaden) turned in profits after zakat and tax, at about SR1.1 billion ($2.94 billion) in the second quarter of 2021, compared to losses of about SR434.15 million in the second quarter of 2020, the company announced in a statement on the Saudi Stock Market (Tadawul).

Maaden’s profits increased by 45.1 percent in the second quarter of 2021, compared to profits of about SR761.15 million in the first quarter, while revenues rose by 11.95 percent to SR6.1 billion.

The company attributed its shift to profitability year-on-year to the increase in the average prices achieved for all products except industrial minerals, despite the decrease in the quantities sold of gold, ammonia and alumina.

Profitability was also due to the increase in net profit attributable to Maaden’s stake in joint ventures and the increase in other revenues, despite the decrease in income from term deposits.