In a surprise move, Lebanon’s BLOM Bank has submitted an official request to the Central Bank of Egypt (CBE) to sell its Egypt unit.
According to a statement from the bank, the CBE has approved the Lebanese bank’s request to conduct due diligence on the possible sale of its stake in BLOM Bank – Egypt, in accordance with the Law No 88 for 2003, regulating the banking and monetary system in Egypt.
In a statement on Tuesday, BLOM Bank said that the step comes due to the deteriorating economic conditions in Lebanon, which has seen a significant dent in the group’s profits. The decision was also galvanised by the Banque du Liban decision No 13129, issued on 4 November 2019, which saw Lebanese banks obligated to increase their capital.
BLOM Bank explained that, in implementing the decision, it is currently studying strategic options, including selling its stake in BLOM Bank – Egypt, to meet the requirements for increasing capital.
The statement indicated that the sale’s completion will depend on obtaining the approval of the Board of Directors at BLOM Bank, and the final approval of the CBE. This would need to ensure that data privacy and the rights of BLOM Bank – Egypt’s clients and employees are persevered, in accordance with the relevant laws and regulations.
According to informed banking sources, acquisition negotiations for BLOM Bank – Egypt involving the Emirates NBD – Egypt have begun. The negotiation comes as part of Emirates NBD’s desire to expand in the Egyptian market.
The BLOM Bank seeks to benefit from the power that its Egypt unit wields, which alone accounted for 43% of the group’s profits in 2019. This financial clout would provide the necessary financial support to ensure that the group continues to face the ongoing economic crisis in Lebanon.
The continued economic hardship in Lebanon has caused a decline of about 77% in the group’s profits over 2019 compared to 2018.
According to sources, Egyptian investment bank CI Capital has been chosen as an advisor for Emirates NBD’s acquisition of BLOM Bank – Egypt. The office of Baker & McKenzie was chosen as legal advisor.
The sources indicated that other banks have shown interest in buying BLOM Bank – Egypt, however, Emirates NBD is making the most moves to seal the deal.
Earlier this year, Daily News Egypt revealed that negotiations have taken place between a Saudi bank and BLOM Bank to buy the latter’s Egypt operations. This came as part of the Lebanese group’s plan to exit the Egyptian market to support its financial position in Lebanon.
BLOM Bank established its presence in the Egyptian market at the end of 2005, through its acquisition of the Misr-Romanian Bank in a deal worth about $10m.
The bank provides a full range of banking and financial services, and has a network of 42 branches across Egypt, including in Cairo, Alexandria, Hurghada, Sharm El-Sheikh, Port Said, Mansoura, and Minya.
BLOM Bank stressed its pride in its Egypt operations and its achievements, results and growth over the past few years. It noted that it is the largest asset of the BLOM BANK Group outside Lebanon, and a major tributary to its growth in the region and globally.
The bank added that this significant growth could not have been achieved without the efforts and expertise of its employees. It added that it considers its employees as a crucial factor that has ensured the bank’s success and expansion in the Egyptian market.