Mashreqbank and Emirates NBD, both based in Dubai, had been shortlisted in an auction of Libyan banking licences in April.
UAE banks lose bids for Libya licences
The choice was unsurprising given the 5 per cent UniCredit stake held by the Libyan Investment Authority, the country's sovereign wealth fund. But the decision to cut the number of licences from two to one was perplexing to some competitors. "The original request from the central bank of Libya suggested that there were two bank licences being offered and we were one of the six shortlisted banks competing in the final round," an Emirates NBD spokeswoman said.
"We have now been informed by the central bank of Libya that they have decided to grant only one bank licence." Emirates NBD remained "very committed to establish a subsidiary bank in Libya and will continue to discuss options with the regulators in Libya", she said. John Iossifidis, the head of international banking at Mashreq, said the bank "remains committed to its strategic expansion plans across the region".
Analysts say banks across the Gulf have long been keen to get a foothold in north Africa where growing wealth and large populations are driving a boom in consumer banking demand. With a relative dearth of lenders in Libya, Algeria, Tunisia, Morocco and Egypt, competition for this new business is scarce and the potential for profits large. "North Africa excluding Egypt is very conservative and it's hard for a foreign bank to get a licence," said Sofia el Boury, a banking analyst at Shuaa Capital in Dubai. "It's unfortunate for Mashreq and Emirates NBD because they were really hoping to expand in that market."
The UAE's banks already have a substantial presence in the north African banking market. email@example.com