RECIPE FOR RECOVERY

Lebanon 2019 | FINANCE | INTERVIEW

Privatization, transparency, the rule of law, and strong infrastructure are crucial to ensuring Lebanon's capital markets and broader economy have wind in their sails.

Jean Riachi
BIOGRAPHY
Jean Riachi started his career in France, where he held several senior positions in the banking sector from 1985 to 1993. In 1993, he relocated to Lebanon to establish FFA, which has since become the leading specialized bank in the country and a major regional player with a full fledged subsidiary in Dubai (DIFC). He holds an MBA from HEC Paris Business School and is a certified director (IDP-C) from INSEAD’s International Directors Program. He is an active member of Human Rights Watch Beirut Committee (HRW) and a board member of the Lebanese American Chamber of Commerce (AMCHAM Lebanon).

Can you guide us through FFA's process of diversification?

I started the company in 1993 after returning to Lebanon in light of the positive economic prospects brought by the end of the civil war. FFA started as a financial company with four people and has grown ever since. In 2006, we obtained a license to operate in Dubai's International Finance Centre, and in 2007 we transformed our license from a financial institution to a private bank, managing operations from our two headquarters in Dubai and Beirut. We are specialized in investment banking, private banking, and capital markets. The rationale behind our diversification process mainly stems from the need to respond to clients' investment needs; indeed, our core business comprises both investing and assisting corporations that need advisory, capital, raining, or M&A services. Thus, our activities follow different directions based on strategic decisions and our clients' recommendations. We also have a real estate development arm with landmark projects in Lebanon and Europe and will soon to launch an infrastructure mezzanine fund for different kinds of infrastructure projects, mainly PPPs, across MENA and sub-Saharan Africa. We recently signed an MoU with the International Finance Corporation and are looking for an experienced infrastructure developer to join the venture by 4Q2019.

What makes you among the best private banks in the Middle East?

Our key strength lies in our team, which is composed of highly qualified and dedicated workers. Another essential pillar of our business is our one-on-one relationships with clients. While we do have some products that cater to smaller investors such as online trading, most of them are dedicated to high net worth individuals with whom we maintain a personal relationship built on trust. We want to understand what the client wants, which can take a lot of time. Moreover, the costs of acquiring and supporting the client are so high that we deal only with big ones.

What is your outlook on the real estate sector in Lebanon?

It has been suffering in recent years due to regional crises that have diminished the flow of investments here and increased the weight of the recession and public debt. The situation has also been aggravated by the increase in interest rates on deposits, which has slowed down investments in real estate. It is essential for our line of business to diversify activities, wait for the sector to pick up again, and look for investments elsewhere, especially in Europe. We differ from normal corporate or retail banks in that we do not benefit from soaring interest rates or financial engineering; therefore, it is crucial we find our way to diversify, innovate, and generate revenues.

How should Lebanon improve its investment climate?

Lebanon needs huge investments in infrastructure to restart the economy. These will have a direct effect on the economy, solving issues like electricity shortages or the budget deficit. The Capital Investment Plan is another brilliant idea to kick off economic growth. We need an efficient internet network, 24-hour electricity provision, and a well-maintained road network to positively affect the business and investment climate. On the front of the budget deficit, the government is showing a willingness to engage in reforms and cut the number of civil servants, which was inflated in the past due to political considerations. However, we would like to see a stronger commitment in this direction rather than simply raising taxes, which will have the opposite effect of restraining initiative from the private sector. For capital markets to have momentum, we need transparency, a growing economy, and a functioning stock market. Key to all of this is privatization. Until the Beirut Stock Exchange is made completely private and independent and follows the letter of the law, our capital markets will not be able to adequately develop.