Saturday, April 2, 2011

Libyan Rebels: Corporate ABC's

Arab Banking Corp (ABC). received 73 loans totaling $35 billion from the Federal Reserve Bank during the Fall 2008 financial implosion.  The bank was one third owned by the Libyan Central Bank at the time.  Since then, Libya's Central Bank raised their stake to 59% of ABC.  Despite heavy LCB ownership,Arab Banking is unencumbered.  Bloomberg reported:

The U.S. government has frozen assets linked to the regime of Libyan ruler Muammar Qaddafi> and engaged in air strikes against his military forces, which are battling a rebel uprising in the North African country. Arab Banking got an exemption that allows the firm to continue operating while barring it from engaging in any transactions with the Libyan government, according to the U.S. Treasury Department. 
Here's why ABC is exempted:

“ABC’s New York branch conducts wholesale business and plays an important role in helping U.S. companies conduct business in the Middle East,” the company said in the statement. “The New York branch of ABC also participates in enhancing the liquidity of U.S. markets and virtually all of its employees are U.S. citizens.”
It's a funnel for U.S. corporate interests and Middle Eastern oil money:

Libya previously shared the bank with the Abu Dhabi Investment Authority (United Arab Emirates) and the Kuwait Investment Authority, both sovereign investment funds.
ABC stands ready to serve old clients, other than Gadhafi.  How might it help the Libyan rebel's new Libyan Oil Corporation and Central Bank in B?  Will the U.S. figure out who the corporate savvy opposition is?  If so, ABC can serve their banking needs.  How long before the rebels need structured finance?

ABC's press release "Arab Banking Corporation not subject to asset freeze by US or UN" stated:

The Central Bank of Libya owns 59.3% of ABC and the Kuwait Investment Authority has a 29.6% stake in the bank. 

Shareholders’ equity at 31 December 2010 stood at US$3,428 million compared to US$2,191 million the previous year, boosted by the US$1,110 million share capital increase in the first quarter of 2010. ABC Group’s capital adequacy ratio at 2010 year-end was very strong at 23.1%, predominantly Tier 1, which totaled 18.4%.
The Central Bank of Libya holds 59% of ABC's $3.5 billion in shareholder equity. ABC's Board chair is head of Libya's sovereign wealth fund (SWF), the Libyan Investment Authority (LIA).  LIA had billions invested in The Carlyle Group, a private equity underwriter (PEU) part owned by a United Arab Emirates SWF.  This is your clue to our mixed-up financial world.

SWF's will be banks, and SWF's will be PEU's.
It's a mixed up, muddled up, shook up world,
including LIA, la la la Lia. la la la Lia

Well, I'm not dumb but I can't understand
why ABC walks like Gadhafi and talks like Blair
Oh my LIA, la la la Lia. la la la Lia

It brings back the days when Tony Blair et al courted Col. Gadhafi.  History rewriters are out in force:

“There was an uneasy detente between the United States and Libya” when the loans were made, said William Poole, senior economic adviser to Merk Investments LLC and a former president of the Federal Reserve Bank of St. Louis. “It would not happen in the morning.”
 LIA, la la la Lia. la la la Lia...

Update 8-28-11:  The currency that helped get BP's Libyan oil deal, the convicted Lockerbie bomber, will remain in Libya under Rebel rule.  A deal's a deal.