Central Bank steps in
to manage three banks

Temporary directors named to run Federal Bank,

Banque de Crédit National, and Al Baraka Bank

The Central Bank (BDL) has appointed temporary directors to help three small banks improve their liquidity, profitability, and increase their capital. The banks are Federal Bank of Lebanon, Al Baraka Bank-Lebanon, and Banque de Crédit National (BCN).

Saad Andary, a former BDL deputy governor, will be in charge of Federal Bank. Samir Hammoud, former Chairman of BDL’s Banking Control Commission, will manage BCN. Charbel Abdallah Moubarak will be the temporary director of Al Baraka Bank Lebanon.

Federal Bank, which has eight branches, was managed by Ayoub-Farid Michel Saab who shares the bank’s ownership with the heirs of the late Fadi Michel Saab. BCN, whose largest shareholder is Hicham Itani, was headed by Nader Hariri. Al Baraka is an Islamic bank and a subsidiary of Al Baraka Group (ABG). ABG, which is listed in Bahrain and managed by Adnan Ahmed Yousif, was founded by late Saudi billionaire Saleh Abdullah Kamel.

According to an insider source who requested anonymity, the mission of the temporary directors is to put the three banks on the track of recovery. One of their tasks will be helping them reduce their cost by taking measures such as closing an unnecessary branch. The source said that addressing the difficulties facing small banks is much easier than doing so for large ones and doesn’t take much time. He said that small banks don’t need much liquidity like large banks and that the three banks would need a combined sum of $30 million to $40 million to fix their problems. If the efforts of the temporary directors don’t succeed in helping these banks, their problems will be addressed in the restructuring project of the overall banking sector which would include mergers or liquidation.

ABG said in a statement that it “strongly condemns” the action by BDL to “seize control” of Al Baraka Bank-Lebanon. It said that since the start of the banking crisis they have worked closely with BDL and other authorities to support their liquidity and protect the interests of their customers. “To this end, Al Baraka Bank Lebanon has deposited more than 80 percent of its assets, representing customers’ deposits with the Central Bank, which in return refuses to grant access to these funds,” ABG said.

The source said that the BDL measures apply to all banks without favoritism and that solving this problem will be part of the overall government plan to address its indebtedness issue.

According to the source, foreign banks operating in Lebanon, like Arab Bank and Citibank, are faring well and providing banking services to their customers, and that a large international group can support the solvency of its small local subsidiary while awaiting a general solution of the banking crisis.

Federal Bank’s total assets stood at $707.4 million at the end of 2018, BCN’s assets were $185.5 million, and the total assets of Al Baraka Bank-Lebanon amounted to $365.2 million.