SGBL-LCB’s $580 million deal reportedly approved

Report says SGBL began receiving acquisitions, process takes 14 days

July 4, 2011- The Central Bank has given its preliminary approval for the SGBL’s acquisition of some assets and liabilities of the Lebanese Canadian Bank, Al Akhbar daily reported Monday (July 4).

The daily said that the Société Générale de Banque au Liban will begin receiving the purchased assets and liabilities starting today (Monday). It said the completion of the said process might take up to two weeks.

Al Akhbar quoted well-informed sources as saying the LCB’s license will be crossed out from the list of banks operating in the country, but that the holding company would subsist in order to work out the lawsuits filed by the bank and against it. In February 2011, the US Treasury Department accused LCB of involvement in a money-laundering and drug-trafficking operation with ties to Hezbollah, but the bank denied the charges. This means the SGBL would not be liable for any repercussions of the legal case.

Negotiations between the two banks had lead to an agreement that does not involve buying the shares of LCB, but only the bank’s assets and liabilities, except for doubtful accounts which will remain up for further scrutiny.

The total value of the acquisition amounted to $580 million. But Al Akhbar quoted sources of the Central Bank as saying that the LCB’s shareholders will not receive the entire amount after liquidation, as $300 million will be kept in an escrow account for two years, which can be extended. The source said the frozen funds will be a guarantee for the SGBL against the risk of transmission of property and the outcome of auditing the transferred funds.