Banking Control Commission pushing for liquidation of properties
The Banking Control Commission of Lebanon (BCCL) issued a memorandum to banks asking them to liquidate their real estate assets. This memorandum is a follow up of the execution of the Central Bank’s article 154 of the Law of Money and Credit, which stipulates that banks should sell their property assets within two years,” said BCCL’s Chairman Samir Hammoud. “If banks don’t succeed in doing so, they are requested to take allowance against these properties for five years,” he said. Article 154 stipulates that a bank is allowed to purchase partnership, shareholding, or property shares, provided that the purchase objective is to settle debts in mortmain (inalienable ownership) or those which are doubtful. But the bank should liquidate these assets within two years. If the bank couldn’t abide by this lapse of time involuntarily, it should refer back to the BDL. “Even after the five year period, banks should exert efforts to liquidate their property assets,” said Hammoud. “Banks are not at risk from their property assets currently, but they should work purely in banking services and products and not act as real estate companies,” he said. liquidating real estate assets would reflect positively on the market. “The real estate prices are still relatively high,” said Hammoud. “By liquidating their property assets, banks will increase profitability and generate new liquidity, which will enable them to provide more lending and help grow the economy,” he said.
(Lebanon Opportunities – July 2015)