Lebanon bank adopts ‘green’ model

BankMed’s belief in sustainable development has prompted executives to launch an environmental initiative


Headquartered in Beirut, BankMed is one of the top five banks in Lebanon. Established in 1944, its market share − measured by total assets − has grown over the years to comprise more than nine percent of Lebanon’s banking system. BankMed, through its 54 branches spread throughout Lebanon, and one in Cyprus, offers a wide range of innovative products and quality services tailored to individuals and corporations needs. In Q1 2011 BankMed’s total assets stood at around $12.1bn; customers’ deposits totaled approximately $9.8bn and total loans reached $4.3bn. BankMed has a client-portfolio currently exceeding 130,000 customers.

In 2007, BankMed’s regional presence expanded to Turkey following the purchase of MNG Bank jointly with Arab Bank and was consequently renamed Turkland Bank or T-Bank; a subsidiary commercial bank. T-Bank has implemented an ambitious growth strategy over the last few years seeing its assets increase from $549m in 2007 to $978m in 2010, deposits from $286m to $740m, loans increased from $361m to $661m, branches from 16 to 27 and staff from 390 to 510 employees. T-Bank is currently focused on the Small and Medium Enterprise (SME) sector, and is hence acting more like a niche bank. The group of the bank’s shareholders also has a large presence in Turkey through a controlling stake in the country’s biggest company, Turk Telecom, thus making the group the largest foreign investor in Turkey. The expansion was realised based on our firm belief in the growth potential of the Turkish economy; one that materialised given that Turkey is the fastest growing economy in Europe, and ranks as the 16th largest economy in the world. With the stronger economic integration between Turkey, Syria, Lebanon and Jordan, BankMed’s early entry into Turkey gives it a strong advantage in comparison to other regional banks that are now seriously considering the Turkish market. 

Strategically, BankMed has opted to expand only in selected markets, where it could add value. BankMed’s private bank in Switzerland, BankMed Suisse, is engaged in asset-management and advisory banking services. BankMed (Suisse) is reinforcing its private banking product offering across different markets, encompassing traditional banking services as well as innovative products, such as its own funds (BankMed Cedar Funds) as well as internally engineered structured products.

In addition to private banking in Switzerland, commercial banking in Lebanon, Cyprus and Turkey, BankMed has expanded its activities to investment banking. In 2008, the SaudiMed Investment Company was launched in Riyadh, providing investment and corporate advisory services to a growing base of customers in the Kingdom of Saudi Arabia (KSA) and elsewhere in Middle East. The Group has substantial presence in the KSA through Saudi Oger, one of the largest conglomerates in the region with interests ranging from contracting and maintenance, to telecoms and printing. The presence in the KSA allows for great synergy opportunities in the largest economy of the Arab world, which constitutes roughly 50 percent of total Arab GDP. The ambitious public works and infrastructure investments outlined by the government of the KSA in response to the global crisis provide great opportunities for growth and financing activity in this key Arab market.

Diversified banking
BankMed has been built around transparent business practices, responsible lending policies and careful investment strategies, all of which have allowed the formation of a clear and effective risk governance structure at the board and management levels. Our systems, codes of conduct and internal controls are designed to meet the requirements of the stringent international standards and adapt to the new Basel III regulations. BankMed is exposed to a broad range of risks in the normal course of its business. The policies are designed to identify and quantify these risks, set appropriate limits in line with the defined risk appetite, ensuring control and monitoring adherence to the limits. BankMed maintains an adequate capital base to cover risks inherent in its business operations. The adequacy of capital is actively managed and monitored using, among other measures, the rules and ratios established under the Basel Accord, as adopted by the Central Bank of Lebanon. The primary objective of BankMed’s capital management is to ensure that the bank maintains a sufficient level of capital to exceed all regulatory requirements and to achieve a strong credit rating, while optimising shareholder’s value.

BankMed has always had a distinguished presence in the corporate banking business, where it has a well-established franchise, providing funding and other services to most of the top corporate names in Lebanon. BankMed has also strengthened its SME unit, and its portfolio has significantly increased in this crucial market for what we consider to be a necessary “balanced” growth of the Lebanese economy. In addition to corporate finance, brokerage services − available 24 hours a day – have been boosted through MedSecurities, the brokerage arm of the bank which was established five years ago.

Trade Finance at BankMed is one of the key revenue generating businesses. BankMed continues to demonstrate excellence in the trade finance area, by providing distinctive and customised services to its clientele. With the growing needs of Lebanese corporates to expand their businesses locally as well as overseas, BankMed has been a reliable provider of trade finance solutions; one that corporate customers can count on. Despite the financial crisis during the past few years, and despite the challenging moments that Lebanon and the region have experienced, BankMed was able to grow its trade finance business, and to expand its regional and international Financial Institutions network of more than 70 prime correspondent banks in 55 countries. This has enabled the Bank to cater, in a timely and professional manner, to its clientele’s trade finance needs in virtually every corner of the world. BankMed’s main trade finance products include: letters of credit, letters of guarantee, documentary collections, standby letters of credit, etc. BankMed was also able to successfully work on trade finance opportunities, such as the risk participation and forfeiting areas. This has enabled the bank to increase its trade finance business and enhance its capabilities. More specifically, BankMed’s main capabilities in the Trade Finance area are as follows:

– Letters of Credit: On the import side and through its wide network of correspondents, BankMed is one of the main players of LC issuance for imports into Lebanon. With more than 90 percent of the local corporates dealing with our bank, our trade volumes have significantly increased over the past few years and we have been able to conclude a number of large trade ticket transactions for prime customers and in challenging geographies (Africa, South American, Latin America, MENA). On the export side, BankMed has been involved in a number of export finance transactions involving the discount of export LCs and the handling of door-to-door transactions tailored specifically for some of our large corporate customers. This has enabled our customers to hedge the various risks associated with the export activity.

– Letters of Guarantee: Given the nature of the contracting business and the fact that we bank with most of the large contractors in Lebanon including names with regional/international reach, we have been approached for the financing of large contracting projects overseas. This involves the issuance of large tickets and long term LGs (such as performance bonds, advance payment bonds, etc.), which would not have been possible without our wide network of FI relationships and the confidence that our correspondents had in BankMed.

– Risk Participation and Forfeiting: As part of our business development initiative, we have grown the bank’s revenues by developing our trade finance/sales desk capabilities. In addition to our standard channels of trade finance, we have created our own network of correspondents for dealing in primary/secondary market trade finance assets. A number of successful transactions have been closed and we expect to close more in the future.

This activity requires specifically tailored programmes and structures for investing in both import and export activities. This includes risk participation, risk sharing, LC discounting, promissory note discounting, acceptance discounting, purchasing of notes which are all associated to trade finance activities. This has enabled the bank to increase its trade finance business as well as its sophisticated capabilities, and to diversify its portfolio by investing in different transactions and geographies. 

With the significant growth of retail banking in Lebanon, BankMed developed further its retail banking services, and introduced unique retail products to continuously meet growing client demand. New branches have also been added, providing presence in the most remote areas of Lebanon.

A sustainable banking model
Sustainability for BankMed is a 360 degree vision. To start with, BankMed has always believed that a thriving Lebanese economy is the best possible environment for a successful bank. Indeed, BankMed’s role in financing commercial, industrial, and contracting activities has contributed to the growth of these sectors and the resurgence of the Lebanese economy since the early 90s. In addition, we believe that an institution should continuously reassess and reinvent itself in order to meet the needs of a fast changing world. As such, BankMed went through a major reorganisation campaign between 2006 and 2008, consolidating the three banks within its banking group into one universal bank: BankMed. This has created great efficiency gains in terms of operations and customer service. BankMed thrives to assure the best quality banking service.

Sustainability prompts the bank to always adopt the latest in technology by constantly upgrading its systems to keep up with the fast pace of technological innovation. Since the completion of the reorganisation and rebranding phase, profits have been steadily increasing.  

BankMed has been unaffected by the global financial crisis, mostly due to its conservative banking culture which keeps leverage down and implements all the stringent regulations of the Central Bank. In addition, the practice of internal self-regulation and highly reliable risk management policies, have further shielded the bank. The liability side of BankMed is dominated by deposits which have been a stable source of funding.
On the asset side, BankMed keeps high liquidity ratio with loans to deposits ratio among the lowest in emerging markets. BankMed realises that its most valuable asset is its human resources, and thus the emphasis on human resources training and development.

In addition, BankMed’s belief in sustainable development and green banking has prompted the institution to launch a very effective environmental initiative, or the Happy Planet campaign, to raise awareness about issues pertaining to the environment. This project includes funding of specific environmental programmes. BankMed has undertaken various projects in collaboration with government departments and ministries, NGOs and educational organisations, to preserve Lebanon’s natural environment.  BankMed launched its Happy Planet website in an attempt to educate the community about preserving the environment. It also launched, for the second consecutive year in a row, its Green School and Student Competition to raise environmental awareness among Lebanese youth.

BankMed has taken another major step to ensure a better world for tomorrow’s generation by being the first Lebanese bank to have taken concrete steps to assess, measure, and offset its Corporate Headquarters’ carbon footprint. The bank assigned Sustainable Environmental Solutions (S.E.S.) to audit and offset the Bank’s direct and indirect emissions of greenhouse gases in 2009. By becoming carbon neutral, BankMed solidifies its position as a leader in Lebanon in taking environmentally friendly initiatives.