Housing Bank of Lebanon: A Key Player in the Lebanese Economy
The Housing Bank of Lebanon has been a major player in the country’s economy for decades, providing loans to citizens looking to purchase, construct, renovate, complete or revamp real estate property. As a leading financial institution, it plays a crucial role in the country’s economic landscape.
Transactions between Affiliates
While there are no unified legal definitions of affiliates in Lebanon, various circulars issued by the Central Bank of Lebanon (BDL) provide guidance on what constitutes an affiliate. The bank distinguishes between three types of control exercised by banks over their affiliates: exclusive control, joint control, and participation interest.
- In terms of transactions between a bank and its affiliates, there are no specific limitations other than the usual conflict-of-interest limitations set out in the CMC and Code of Commerce.
- Granting loans to or conducting transactions with board members, major shareholders, or their family members requires prior approval from the bank’s general assembly and sufficient collateral.
Banking Categories
Lebanon has three main categories of banks:
Commercial Banks
- Entitled to carry out a broad range of activities related to commercial banking
- Examples: [insert examples]
Specialist Banks
- Focus on medium- and long-term loans, direct investment, participations, and the purchase and sale of financial instruments
- Examples: [insert examples]
Islamic Banks
- Operate under sharia-compliant principles, such as mudarabah, musharakah, and ijara
- Sharia board issues scholarly opinions to ensure compliance with Islamic law
- Examples: [insert examples]
Regulatory Challenges
The Lebanese banking industry faces several regulatory challenges, including:
- The country’s first-time ever sovereign debt default in 2020
- Ongoing economic, financial, political, and social crisis since 2019
- Balancing growing supranational regulations focused on anti-money laundering (AML) with preserving the specificities of the Lebanese banking sector
Consumer Protection
The Consumer Protection Law No. 659 of 2005 includes banks within its scope of application. However, the BDL remains the primary safeguard for consumer rights in the banking sector through various circulars issued over the years.
Key Circulars
- Basic Circular No. 134 of 2015: sets communication guidelines and information obligations
- Other circulars: [insert other circulars]
Future Changes
It is expected that legal and regulatory policies will focus on addressing the effects of Lebanon’s economic crisis, including capital control restrictions. The BDL will likely issue new circulars to support the banking sector and protect consumers’ rights.
Accurate as of January 2021
This article provides an overview of the Housing Bank of Lebanon’s role in the country’s economy, its transactions with affiliates, and the regulatory challenges it faces. It also highlights the different categories of banks operating in Lebanon and their respective activities. Finally, it anticipates future changes in the legal and regulatory policy landscape in response to the ongoing economic crisis.