LONDON Feb 24 Libya sought to invest in a major
U.S. bank to form a strategic partnership at the height of the
credit crisis in 2008 which engulfed the financial sector, a
confidential diplomatic cable shows.
The cable dated July 21 2008, obtained by WikiLeaks, reveals
the depth of oil-rich Libya's interest in the U.S. financial
sector at a time when banks around the world reeled from losses
in the deteriorating credit market.
It details operations of the Libyan Foreign Bank, which is
owned by the country's central bank, based on meetings between
the U.S. embassy staff in Tripoli and Mohammed Abdullah Bayt
Almal, LFB chairman and former finance minister.
It also shows how Libya's sovereign wealth fund and other
institutions tried to sell off U.S. assets.
"We had heard and reported previously that all Libyan
government and financial institutions had divested themselves of
holdings and accounts in the U.S. in response to potential
seizure of assets," the cable reads.
"According to Bayt Almal, the LFB continues to hold U.S.
dollar accounts and - despite efforts by the Libyan Investment
Authority and other Libyan government entities to limit their
exposure in the U.S. - is actively exploring the possibility of
establishing a 'strategic partnership' with a major U.S. bank
and investing in a U.S.-based bank."
LIA is the umbrella body for the country's sovereign wealth
funds that manage oil windfall revenues. A separate confidential
cable showed it had $32 billion in cash with several U.S. banks
each managing up to $500 million. [ID:nLDE71N0PC]
The fund is estimated to manage assets of around $70 billion
with stakes in European blue chips such as Italian bank
UniCredit (CRDI.MI) and British publishing group Pearson
The cable showed the government planned to significantly
boost the coffers of LFB in 2008.
"A plan currently (is that central bank governor) Farhat Ben
Gdara calls for a ten-fold expansion of the LFB's capital, from
$1 billion to $10 billion. Conceding that LFB had aimed high,
Bayt Almal said he would be happy with $6-7 billion, and
expected to get it," the cable said.
LFB has capital of $2 billion as of 2009.
LFB owns nearly 83 percent of London-based British Arab
Commercial Bank [BACBL.UL] and 98 percent of Bahrain-based
Alubaf Arab International Bank.
For a story on Libya and U.S. banks, see [ID:nLDE71N0PC]
For a FACTBOX of Libya's investments, see [ID:nLDE71K22M]
For an ANALYSIS on Libya's wealth fund, see [ID:nLDE71L1V0]
(Reporting by Natsuko Waki; Editing by Toby Chopra)