Lebanese banks, many flush with liquidity, are looking for ways to lend profitably both at home and abroad. Some, like Byblos Bank and the Banque de la Mediterranee, have taken part in the Eurobond issues launched by the government this year. Others are expanding their product base at home to attract new retail and corporate customers.

Banque Audi, which is owned by Lebanese and Kuwaiti shareholders as well as Bankers Trust of the US, launched an innovative share-buying fund in April linked to Solidere, the private company responsible for rebuilding Beirut's city centre. Marc Audi, the Banque's Deputy General Manager, told reporters just before the launch that the aim was to recruit up to 2,000 new customers, rather than making a profit on the scheme itself.

The fund offered investors in Lebanon the opportunity to buy shares in Solidere without exposing themselves to potential losses. Investments between $5,000 and $50,000 were eligible for the one-year deal, which was due to close in early May.

Solidere shares immediately responded to the announcement by rising on the Beirut Stock Exchange (BSE), while their global depository receipts (GDRs) reached a five-month high in London. "Solidere is behaving extremely well," commented one dealer in the British capital. "The rise could be directly linked to the new Audi product."

By the end of January, the consolidated balance sheet of the country's commercial banks had risen, on an annual basis, by 23.7 per cent to reach 46,165 billion Lebanese pounds ($30.3 billion). Credit to the private sector was up by just under 22.5 per cent. Shareholder funds increased significantly as well, rising by an impressive 55.8 per cent to 3,070 Lebanese pounds ($2 billion).

The banks themselves are hoping that their good results will also be reflected in share values, although initial indications are that -- as one analyst put it, "the clear upside potential" may take some time to develop given the economic slowdown. Banque du Liban et d'Outre-Mer (BLOM) reported a 53.5 per cent rise in profits to $14.6 million during the first quarter of this year. Fransabank's profits rose by almost 50 per cent in 1997, to $41 million.

The Bank of Beirut recorded profits during the first quarter of 4.261 billion Lebanese pounds ($2.8 million), up by 73 per cent. It is now seeking to attract both individual and institutional investors from Saudi Arabia, the United Arab Emirates and Kuwait, as well as other Gulf states and...

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