Libya Needs to Manage $168 Billion in Assets, Banker Says

Libya has about $168 billion in frozen assets and the Transitional National Council needs to access and start managing the funds as it works to oust Muammar Qaddafi and rebuild the country, former central bank chief Farhat Bengdara said.

The assets include $106 billion owned by the central bank, 55 percent to 60 percent of which is in government securities, and $62 billion held by the Libyan Investment Authority, Bengdara, who resigned in March and heads the International Libyan Bankers’ Association, said in an interview in Istanbul yesterday. The group is advising the TNC about raising finance and reviving the banking industry, he said.

“The council now has a legal status; they can raise money, fund contracts and give loans,” Bengdara said. “They can get finance and the collateral could be these deposits.”

The U.S. and allies recognized the TNC as the sole legitimate governing authority in Libya at a meeting in Istanbul two days ago, a step that allows for greater funding and access to the Qaddafi regime’s assets. The U.S. foresees a “short time-frame” for releasing some of the about $30 billion in assets frozen by the U.S. in February, State Department spokesman Mark Toner said on July 15.

A further 30 percent of the central bank’s assets abroad are in money-market deposits and the remainder is invested in Italy’s UniCredit SpA (UCG), the Arab Banking Corporation and the Libyan Foreign bank, he said. Bengdara is a deputy chairman on the board of UniCredit.

The Libyan Investment Authority’s assets include cash, hedge funds, asset management portfolios, government securities and property.

‘Losing Money’

“No one’s managing these investments so we’re losing money every day,” he said. “Either they should be managed by a newly appointed board of trustees, or they can hire a trustee. This will maintain the assets’ value.”

Bengdara said another priority facing the TNC will be to secure the foreign exchange to put the banking industry back to work, allowing letters of credit and financing of imports.

The council can start to make use of banks with headquarters in the eastern part of Libya, an area under its control, Bengdara said.

President Barack Obama signed an order on Feb. 25 freezing any U.S. assets of Qaddafi, his family and members of his regime in Libya. The mechanics of how the U.S. will unfreeze assets still has to be worked out. United Nations sanctions against Libya remain in place, a hindrance to efforts to get money to the rebels.

Loans

The TNC needs $3 billion to cover the budget for six months, spokesman Mahmoud Shammam said by telephone yesterday. The council is seeking loans secured by the regime’s assets abroad as a means of funding, he said.

Italy will open a credit line to rebels using frozen assets as collateral, and will provide them with 100 million euros ($141 million), Italian Foreign Minister Franco Frattini said on July 15. Another 300 million euros will be released in two weeks and in total, Italy will release 400 million euros, he said, describing the money as loans.

The council is expecting $100 million from Turkey within three days, Shammam said yesterday.

To contact the reporters on this story: Mark Bentley in Istanbul at mbentley3@bloomberg.net.

To contact the editor responsible for this story: Riad Hamade at rhamade@bloomberg.net.

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