May 26, 2009 / 11:29 AM / 9 years ago

Libya's LFB to up HSBC unit stake to 70 pct-paper

TRIPOLI, May 26 (Reuters) - The Libyan Foreign Bank (LFB) aims to hike its stake in HSBC (HSBA.L) affiliate British Arab Commercial Bank to 70 from 25 percent and plans to raise its capital 10 times to $10 billion, the Oea daily reported on Tuesday.

State-owned LFB has held a 0.56 percent stake in Italy’s second-largest bank UniCredit (CRDI.MI) since 1997 and bought another 3.67 percent together with the Libyan Investment Authority sovereign wealth fund last October.

“The planned capital increase to $10 billion is part of a long-term strategy. The (LFB) General Assembly would meet in mid-June on that. Libya Central Bank has the last word as it owns the bank,” Oea quoted LFB bank Chairman Mohamed Bait-Elmal as saying.

“LFB eyes the increase of its stakes in 35 acquisitions across the world. The bank will hike its share in the British Arab Commercial Bank to 70 percent from 25 percent currently,” he said.

Oea quoted Elmal as saying “LFB will increase its stakes in two banks in Paris” but gave no details.

OPEC member Libya, home to Africa’s largest oil reserves, has seen revenue grow as it emerges from decades of Western sanctions, and the government is looking abroad for profitable investments.

Western companies have turned increasingly to Arab oil exporters and their sovereign wealth funds for cash as the financial crisis freezes credit markets and hits their market values.

Elmal was quoted by Oea as saying LFB is looking to expand its investments in North Africa, South and Eastern Africa as well as in China.

“We are making efforts to invest in Brazil because it is a promising market,” he said.

LFB, which has subsidiaries in France and Spain, will also inject more capital into Rome-based Banca UBAE, in which it holds a 49.9 percent stake, according to its website.

The bank also plans to do business in the Libyan market to tap growth and an increased need for banking services.

“We intend to set up a unit inside the bank dedicated to the domestic market and to deal in Libyan dinar because we use U.S. dollars in our operations currently,” El Mal said.

“We seek to reach an adequate capital level to create a bigger enterprise and then achieve a good return,” he said.

Libya is struggling to reform a highly centralised banking system, seen widely as an obstacle to private investment and growth.

As a result of the world economic downturn, LFB saw its net profit shrink to $113 million last year from record-high level of $305 million in 2007, Oea said. It gave no forecast for this year.

Writing by Lamine Ghanmi, Editing by Jason Neely

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