Bahrain’s Bank ABC in talks to buy Egyptian unit of Lebanon’s Blom Bank
Lebanese banks are aiming to strengthen their finances amid economic turmoil in the country
Bahrain-based Arab Banking Corporation, the kingdom's second-largest lender, said it is in talks to buy the Egyptian unit of Lebanon’s Blom Bank.
“Discussions are at a preliminary stage, but there is no certainty that any transaction will be completed,” Bank ABC said in a regulatory filing to the Bahrain bourse, where its shares trade.
“Bank ABC has a stated intention and strategy to consider inorganic growth opportunities and routinely evaluates such matters, and a further announcement will only be made if there is a material development.”
Last month, Emirates NBD, Dubai’s largest lender by assets, said it is also in talks to buy Blom Bank’s subsidiary in Egypt.
In May, First Abu Dhabi Bank, the UAE’s largest lender by assets, mutually agreed to suspend talks to buy the Egyptian subsidiary of Lebanon's Bank Audi due to “unprecedented circumstances and the uncertain outlook relating to the Covid-19 pandemic".
Blom Bank, like other Lebanese lenders, needs to fulfill a requirement from Lebanon's central bank to increase its equity. The regulator issued the requirement last November as Lebanon faces its worst economic crisis in three decades. Lenders who are unable to raise their capital by 20 per cent by the end of February 2021 will have to get out of the market.
Blom Bank's 2019 annual profit of declined 77 per cent year-on-year as it booked impairments of 493 billion Lebanese pounds ($327 million or Dh1.2bn at the official exchange rate) to cover losses.
Reuters reported the sale of Blom's Egyptian unit could raise as much as $300m for the Lebanese lender. Blom Bank Egypt operates 39 branches in the North African country.
Updated: September 9, 2020 01:00 PM