About Corporate Banking
The Lebanese banking sector is one of the most energetic and performing sectors in Lebanon. It is continuously undergoing remarkable modernization, improvement and growth. The Lebanese Islamic Bank S.A.L. is proud to be the first licensed Islamic Bank in Lebanon and a fully active member of this sector.
The Corporate and Commercial Banking Division at the Lebanese Islamic Bank is created to provide corporate clients with a complete range of products and services, customized to fit both their needs and Sharia guiding principles.
With an extensive set of creative financial tools, incorporating the newest technology, LIB is able to secure not only Sharia compliant, but also cost-effective, flexible, and innovative alternatives to the corporate market and its players ranging from small to large corporate clients.
LIB has the appropriate Islamic solutions for almost all corporate clients' requirements, tailored with particular focus on:
- Being 100% Sharia compliant
- Offering fully transparent and flexible transactions.
- Being Reba and interest free transactions.
- Providing very competitive profit rates.
- Functionality and convenience.
- Securing low processing fees with no additional charges or hidden costs.
- Arranging for a speedy process and approval after submitting application and full-related documentations.
At the Lebanese Islamic Bank, we do not only operate as bankers, but also as financial advisors to our existing and prospect clients, providing guidance, assistance and recommendations on issues related to their business activities, performance, financial position and associated risks.
Products & Services
Murabaha is considered the most popular and practical tool used in Islamic Banking. It is a sales contract between the client and the bank, for a certain product or item, required by the client.
A Murabaha transaction can be applied to any Sharia compliant tangible good. To perform a Murabaha, both the seller and goods desired should be identified and clearly stated.
Instead of lending money and charging interest; LIB purchases the desired item from the seller, and then re-sells it to its client; at a predetermined and competitive price, which includes bank's profit. In return, LIB's client reimburses the total amount over agreed upon monthly installments, which varies depending on the nature of product and business, generally ranging from as low as 30 days to as high as 7 years.
Murabaha is mostly used in corporate banking for trade finance, mainly purchases from suppliers in the form of wire transfers, CADs, Letters of credit and Letters of guarantee.
Musharaka is the establishment of a partnership between LIB and the client; through which LIB contributes in financing new or existing projects. In return, LIB will hold a predetermined share in capital and a percentage from profits.
Profit distribution will be allocated according to a pre-agreed upon ratio. In case of losses, both parties will share the losses based on their equity participation.
A Musharaka can take two forms:
1- Fixed Musharaka for a predetermined period. This Musharaka will remain valid until its termination date, agreed upon at initiation. Nevertheless, and for any reason, each of the shareholders can sell his share from the capital and eventually exit the Musharaka.
2- Diminishing Musharaka ending with full ownership. This type of Musharaka is considered among the latest innovations created by Islamic Banks. It differs from Fixed Musharaka only in terms of continuity, as LIB's share will gradually decrease until the client gets full ownership of the project's assets.
Musharaka can be used both for short term and for longer term financing, from residential house purchase to funding capital projects.
As in Musharaka financing, Mudaraba takes the form of a partnership or joint venture between LIB (Rabbul Mal) and the client (Mudarib) for a specific business or project. The main difference is that the bank will provide the capital and the client will provide management, expertise and know-how. In return, LIB will be entitled to a predetermined percentage from profits.
Profit distribution is allocated according to a pre-agreed ratio. Should losses occur, only LIB will bear them.
A Mudaraba is typically used for long-term transactions of substantial size.
A contract between LIB and the client, whereby payment is made in advance for delivery of specified commodity in the future. The goods, quantity, quality, price, the date and place of delivery should be specified in the contract.
Contrary to Murabaha, here the payment is made by LIB in advance and the delivery of good is deferred.
Salam transactions are mostly used in trade commodities including the agricultural field with tenor between 3 to 12 months.
Istisnaa is a sales contract between LIB and the client, by which LIB agrees to purchase from the client a certain product/asset, to be developed and delivered at a pre-determined future time, and at an agreed price. Consequently, LIB will immediately re-sell the product/asset to the client at a predetermined and competitive price, which includes bank's profit. In return, LIB's client reimburses the total amount over agreed upon monthly installments.
Istisnaa is generally used for financing housing projects, construction of industrial and commercial buildings such as warehouses, showrooms, shopping malls, and so on.
Ijara (Islamic Leasing) is the most flexible and practical financing tool allowing individuals and businesses to acquire highly expensive or technologically advanced assets.
Whether machines, equipment, installations, constructions, or other facilities, LIB will help in moderating the impact of high capital expenditure through Ijara.
In Operational Ijara, LIB acquires different type of assets that meet clients' demands and market needs. LIB (lessor), then, leases these assets to any user (lessee), at an agreed upon rental fee. In his turn, the client will manage and operate the assets for a predetermined period of time, and collect revenues accordingly. By the end of the Ijara period, assets are returned to bank possession, which in his turn will seek another user with the same need.
Ijara Muntahia Bitamalok or Lease ending in ownership is other variant of Ijara, which features the transfer of ownership of the leased asset from LIB to the client at the end of the Ijara period at a pre-negotiated price. This form of financing could be used for housing finance.
Other than equipment and machinery, Ijara can also be used to finance cars, housing, and equipment. Ijara period normally ranges from 3 to 7 years.