Abu Dhabi, UAEWednesday 19 June 2019

Bahrain's Bank ABC aims to expand footprint in Mena with acquisitions

Exclusive: The lender is 'well capitalised' and capable of funding acquisitions from its own balance sheet, deputy group CEO says

CCDY84 Bahrain,Manama,the Trade World Center towers
CCDY84 Bahrain,Manama,the Trade World Center towers

Bahrain’s Bank ABC is looking for merger and acquisition opportunities across the Middle East and North Africa to expand its footprint, the deputy group chief executive said.

The Arab Banking Corporation, or Bank ABC as it is known, is well capitalised and can finance acquisitions from its own balance sheet, Sael Al Waary told The National. The lender has considered potential M&A deals in Saudi Arabia, the biggest banking market in the Arabian Gulf, and other jurisdictions in the region.

Despite having a presence in Egypt, the most populous Arab country, Bank ABC wants opportunities that further strengthens its position in the North African market. It would like to then scale up as the lender expects its Egyptian operations to turn around as the economy gathers momentum.

The bank has looked at “all Mena markets”, said Mr Al Waary. “We are just waiting for the right time and right opportunity. We are always in the market for potential acquisitions. The board, the chairman and the shareholders all want us to do that.”

Bank ABC provides corporate banking, trade finance, project and structured finance, lending and Islamic banking services in Bahrain. The lender has also diversified into retail banking through its network of operations in Jordan, Egypt, Tunisia and Algeria.

Gulf banks are increasingly considering mergers and acquisitions as they look to diversify their business lines and gain scale in the face of challenging operating conditions.

Within Bahrain, the central bank is encouraging financial institutions to merge and there are more tie-ups expected in the future, Rasheed Al Maraj, the central bank governor, said last week.

Kuwait Finance House, the largest Islamic bank in the oil-rich country, has launched a bid to acquire Bahrain’s Ahli United Bank. In the UAE, Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank, are in the process of merging, while Saudi British Bank and Alawwal Bank are also combining their balance sheets.

Bank ABC, which reported a 5 per cent year-on-year rise in its 2018 full-year net income to $202 million, expects to see growth driven by its wholesale banking offering, including trade finance and fee-driven businesses such as cash management, and transaction banking.

“We are very strong in [the] trade finance business. We have a big volume and it contributes a high percentage to our revenues,” Mr Al Waary said. The lender has restructured its business model on three pillars: product, coverage and geography and this is the first time the bank is operating “in a very clear holistic view”, he said.

The lender has invested heavily in digitising its operations and plans to launch a digital-only bank this year, which will initially focus on retail products such as credit cards.

“I’m cautiously optimistic about 2019 as the bank is investing heavily on the new platform for transaction banking. We are digitising our trade finance business and digitising our customer experience," Mr Al Waary said. He did not specify how much was being spent on digitisation.

Updated: February 25, 2019 07:26 PM

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