Grasping a Golden Opportunity
By Michael Knipe
Lebanese banks plan to open franchises in Europe, the Middle East and North Africa.
Despite the global banking crisis and its own political and social uncertainties, Lebanon’s economic, fiscal and legal systems continue to perform remarkably well.
The country’s banks and law firms have extended their activities far beyond the confines of their own narrow strip of land on the edge of the Mediterranean.
Over the past three years, net capital and financial flows into Lebanese banks have reached more than $28.4 billion. This has enabled the country to finance its large account deficit of $13 billion, yet still record a substantial $16 billion surplus.
At the heart of this achievement is Bank Audi, the country’s largest financial institution, both in terms of customer deposits and total assets. Its business is divided equally between the domestic and regional markets. Similarly, Abou Jaoude & Associates (AJA), one of the country’s leading legal practices, receives more than 30% of its business from abroad.
With a 22% increase in its profits last year to $352 million, Bank Audi is well positioned not only to assert its current status as a regional bank, but also to establish commercial franchises in Europe, the Middle East and North Africa.
Samir Hanna, Bank Audi’s chief executive, is undeterred by Lebanon’s political uncertainties, the global economic crisis or the recent seismic sociopolitical eruptions in the Arab world. “There will always be change in the Arab world, especially in this area, and therefore we also see opportunities in this change.”
In Lebanon, banking is all about savings, he says. “We don’t have institutional or government-related deposits.”
Clients feel that the country’s banking system is safe, and despite the political developments of the past five months, $5 billion has been deposited, he says, “because the relationship between the clients and banking management is very strong.”
Hanna sees the current lack of liquidity in the Middle East and North Africa as a “golden opportunity” for the bank to grow in the region and beyond.
“You can’t be active in the Levant, the Gulf States or North Africa without having a presence in London and Paris to serve your client base,” he says. So Bank Audi intends to develop a franchise in London to serve its English-speaking clientele in the Arab world and sub-Saharan Africa, and in Paris to serve its French-speaking customers.
Partners in Success
Lebanon’s largest law firm pioneers switch to international standards
As Lebanon regains its status as the Arab world’s primary center of commerce and finance, there is increasing international demand for the country’s top-quality, highly experienced lawyers.
Business dealings today are firmly governed by Anglo-Saxon laws and practices rather than the French system that the country inherited when it gained its independence in 1943.
In September 2008, AJA, the country’s largest law firm, pioneered a significant change from the traditions of family owned law firms by offering its lawyers the opportunity to become partners based on merit.
“By introducing this model, we opened the door for the local
market to work in accordance with international standards.”
Carlos Abou Jaoude, AJA Founder and Managing Partner
“This was a driving force in consolidating our firm, and it acted as an incentive for other law firms to adopt the model,” says Carlos Abou Jaoude, AJA’s founder and managing partner. “By introducing this model, we opened the door for the local market to work in accordance with international standards.”
AJA also introduced the idea of basing client relationships on a business-to-business connection, whereas previously these relationships were based primarily on the rapport of individual business people with individual lawyers.
“This means that any lawyer from within the firm can follow up on matters independent of the personal relationship,” says Abou Jaoude. “Each client is represented by an attorney within the firm who will be solely responsible for cross relating the services required by different
practice areas. This optimizes business efficiency for the firm and the clients.”
The French Connection
Legal eagles open Paris office to handle growing global business
With almost a third of the firm’s turnover originating from international clients, Lebanon’s largest law practice, Abou Jaoude & Associates (AJA), is planning to open offices in Paris this year.
With the core of the firm’s practice concentrated on vital areas of the economy that are banking, finance, tax, real estate, media, telecom, insurance and F&B, it has advised on a stream of transactions, the latest of which involves Beit Misk, a $1.2 billion development project, the largest in Lebanon’s history.
The firm has recently advised on a number of pioneering transactions, including: a $180 million multi-business family debit restructuring involving a large real estate portfolio, the biggest in Lebanon’s history; a $200 million buyout of an African telecom group; the conversion
of a financial company into an investment bank; the launch of a television station funded by a multi-bank private placement; and an energy project jointly developed by Electricité du Liban (EDL) and the Lebanese Ministry of Energy and Water, and the Privatization of the Telecommunications sector.
AJA’s expertise extends to the areas of structured finance, private equity, privatization, capital markets, international trade, intellectual property and franchising.
With a team of 42 lawyers, the largest complement of lawyers in Lebanon, including 10 with high degrees from U.S. or French universities, AJA expects to double its turnover this year.
The firm’s new office in Paris will be led by a group of corporate lawyers with experience in working with British and American law firms to provide a platform from which to follow up on the firm’s international transactions.
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