Italian Sanctions Against Qaddafi Stop Short of Libyan-Owned Banca UBAE

Italy’s sanctions against Muammar Qaddafi and his family have stopped short of curtailing the activities of Banca UBAE SpA, the Rome-based trade-financing bank controlled by Libya’s central bank.

UBAE, which had 3.1 billion euros ($4.3 billion) of deposits at the end of 2009, continues to provide letters of credit, said an executive at UBAE’s Milan branch, who declined to be identified, citing company policy. UBAE’s 11th floor office, with views of Milan’s Duomo Cathedral, was serving customers yesterday. Officials at the Rome-based Bank of Italy, which has licensed UBAE since 1972, declined to comment.

Italy, Libya’s main trading partner, imposed on March 5 a freeze on Libyan assets under a wider ban by the United Nations. While countries, including the U.K. and Austria, extended the freeze to members of the country’s sovereign wealth fund, the Libyan Investment Authority, Italy said it will monitor activity involving other Libyan entities. The European Union may widen the sanctions to include more individuals and organizations.

“Only when and if we understand what belongs to the Qaddafi family and what belongs to the sovereign funds, can we have a correct implementation of the United Nations resolution,” said Giuseppe Di Taranto, an economics professor at Rome’s Luiss University. “UBAE is an example in this sense: as a government, you can only act when that distinction is absolutely clear.”

UniCredit Stake

UBAE’s biggest shareholder is Libyan Foreign Bank with a 68 percent stake and other owners include UniCredit SpA (UCG), Italy’s biggest lender, with an 11 percent stake, according to UBAE’s website. A spokesman for UniCredit declined to comment on UBAE.

The bank, which employed about 170 people as of last year, provides finance for exports to countries such as Libya and Sudan, as well as imports of oil. Libyan Foreign Bank, owned by the country’s central bank, accounted for about 37 percent of UBAE’s deposits in 2009, Fitch Ratings said in a report in May.

Fitch placed UBAE’s BB+ rating, the top non-investment grade, on review on March 2, citing instability in Libya. The bank’s liquidity benefits from a “high proportion of liquid assets, comprising the investment of deposits, predominantly from banks, government and quasi-government entities that make up UBAE’s customer base in the Middle East and North Africa region,” Fitch said in a statement. UBAE’s rating remains on review, Fitch said yesterday.

Photographer: Mahmud Turkia/AFP/Getty Images

Libyan leader Muammar Qaddafi arrives for a ceremony of loyalists to mark 34 years of 'people power' in Tripoli on March 2, 2011 during he vowed to fight an uprising against his 41-year rule to 'the last man, the last woman', as rebels repulsed an attack by his forces on an eastern town. Close

Libyan leader Muammar Qaddafi arrives for a ceremony of loyalists to mark 34 years of... Read More

Close
Open
Photographer: Mahmud Turkia/AFP/Getty Images

Libyan leader Muammar Qaddafi arrives for a ceremony of loyalists to mark 34 years of 'people power' in Tripoli on March 2, 2011 during he vowed to fight an uprising against his 41-year rule to 'the last man, the last woman', as rebels repulsed an attack by his forces on an eastern town.

Libyan Shareholders

Founded in 1972 by Italian, Libyan and French shareholders, UBAE assisted Libyans seeking business with Europe when the country faced sanctions during the 1980s and 1990s. Since the easing of restrictions in 2004, UBAE expanded outside Libya and added services. It has a brokerage license and assists Libyan companies in finding European partners for local projects.

The bank has ties to the country’s sovereign fund, the Libyan Investment Authority, through its main shareholder, and acts as a broker to the Libyan Investment Authority on its European securities trades, former general manager Marco Ferrario said in an interview last year.

Both Libya’s central bank and the Libyan Investment Authority own shares in UniCredit, and the country has invested in Finmeccanica SpA (FNC) and Juventus Football Club SpA (JUVE), owner of Italy’s most successful soccer team.

To contact the reporter on this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net; Lorenzo Totaro in Rome at ltotaro@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net Craig Stirling at cstirling1@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.