The consolidated balance sheet of investment banks reached $4.1 billion at the end of June 2014, increasing by 3.2 percent from end-2013 and by two percent from end-June 2013, according to the Central Bank (BDL).
“Growth is mostly driven by fee generation and financial instruments such as securitization and private banking services including portfolios management and investment operations,” said Fouad Rahme, General Manager of BLC Invest.
Private sector deposits totaled $2 billion at the end of June, increasing by 3.8 percent from end-2013. It decreased by 1.4 percent from a year earlier.
“Investment banks had less growth in deposits when compared to commercial banks, since they target long term deposits,” said Rahme.
The BDL said that commitments to the financial sector totaled $645 million at the end of June 2014, constituting a rise of eight percent from end-2013 and a year-on-year increase of 11.5 percent.
The operations of investment bank operations with commercial banks reached $1.9 billion at the end of June, down by three percent from the end of 2013, and up by 2.7 percent from end-June 2013.
“Investment banks are becoming more specialized as well as more independent from commercial banks,” said Rahme. “Some new investment banks entered the market recently and are not affiliated to commercial banks. They are serving the banking sector and creating their own income,” he said.
Lending to the private sector totaled $1.3 billion, increasing by 7.6 percent from end-2013 and by 8.8 percent year-on-year. “Although growth is positive, we still cannot compete with commercial banks on this level, especially in the light of long term subsidized loan programs and offers in these banks,” said Rahme. “We are targeting the private sector now through financial instruments, like bank issuances and convertible bonds, but we can be more effective with more activation of the role the stock market, where we can work on companies’ capitalization and Initial Public Offerings (IPOs),” he said.
Investments in government securities totaled $580 million at the end of June, an increase of 17 percent from end-2013 and a y-o-y decrease of 13 percent. The total capital account of investment banks went up by 5.4 percent from end-2013 to reach $1.1 billion at the end of June.
There were 17 investment banks with a total of 22 branches as at December 2013. “The market is too small to absorb such a big number of banks,” said Rahme.