Believing in Egypt’s potential and opportunities in the banking sector, the Arab Banking Corporation (Bank ABC Group) acquired BLOM Bank Egypt, opening the door to increasing its market share in the local market. It also allows the entity to offer clients new innovative services. Daily News Egypt interviewed Brendon Hopkins, Chief Financial Officer (CFO) at Bank ABC Group, to know the bank’s next steps and future plans in Egypt.
What are the next steps following the acquisition of BLOM Bank Egypt?
On 11 August 2021, Bank ABC completed the acquisition of a 99.5% stake in BLOM Bank Egypt, following a successful mandatory tender offer and securing all necessary regulatory approvals. In the next phase of the transaction, Bank ABC’s two Egyptian subsidiaries, Bank ABC Egypt and BLOM Bank Egypt will continue operating as independent entities until the legal merger is completed. The merger is subject to regulatory approval and is expected to conclude in the first quarter of 2022.
Following the legal merger, the business integration will combine BLOM Bank Egypt with Bank ABC Egypt into one bank, with the aim to provide a unified and vastly expanded Bank ABC Egypt brand and customer value proposition.
Is there an exact date to finalise the legal merger of Bank ABC Egypt and BLOM Bank Egypt?
The acquisition was completed on 11 August 2021; now, the process of the legal merger can begin. Bank ABC Egypt and BLOM Bank Egypt will operate as two independent subsidiaries of Bank ABC Group until the legal merger is finalised, which we are targeting for the first quarter of 2022, subject to further regulatory approvals.
After the legal merger, a full business integration process will commence over the remainder of 2022, combining business teams and IT platforms. BLOM Bank Egypt will be completely rebranded as Bank ABC Egypt to achieve a fully unified brand and customer value proposition. We will be actively working with all stakeholders, including the Central Bank of Egypt (CBE) and other regulatory authorities, to accelerate this timeline as much as we can.
What are the reasons behind this deal?
Bank ABC has been in Egypt for many years, and it has always remained a longstanding objective of the bank to achieve a greater size presence in the country due to its attractive fundamentals – fast economic growth, large population, favourable demographics, developing banking market, and more. When BLOM Bank Egypt became available in a sale process last year, this was an opportunity that Bank ABC did not want to miss, despite being in the challenging environment of the COVID-19 pandemic. This opportunity will more than triple Bank ABC’s market share in Egypt, expanding our product portfolio and market reach with access to an additional 41 branches, more than doubling Bank ABC Egypt’s current network.
The acquisition of BLOM Bank Egypt will also boost Bank ABC Group’s post-COVID-19 performance, significantly enhancing our revenue generation and profitability, thereby delivering value to all stakeholders. BLOM Bank Egypt already has a strong business in wholesale and retail, along with strong capital and liquidity, which when combined with Bank ABC Egypt’s business will lead to even greater earnings potential.
The acquisition of BLOM Bank Egypt will also complement our Group strategy to expand Bank ABC’s footprint in MENA and offer current and new customers a full range of international banking services. Customer service and product offerings across our client portfolio, including within digital and mobile banking, will also be enhanced by leveraging the Group’s capabilities in its other network markets such as our award-winning mobile-only bank, ila, in Bahrain, and our leading digital payments provider, Arab Financial Services (AFS).
All in all, the acquisition of BLOM Bank Egypt is the right fit to help drive forward Bank ABC’s strategy to be MENA’s leading international bank.
How do you view the Egyptian market, future of the banking sector in Egypt?
We view Egypt as a country and banking market with vast potential. With a population of more than 100 million and a strong cultural heritage, Egypt has the fundamentals to support fast economic growth and further strengthen its position as an integral part of the MENA region’s evolving economy.
As in any economy, the banking sector in Egypt is critical to future economic growth by providing credit and other financing for investment and entrepreneurial activity, a secure environment for depositors, underpinning conditions for financial stability and promoting financial inclusion. Following the acquisition of BLOM Bank Egypt, Bank ABC will be in an even stronger position to play its part in the future development of the banking sector in Egypt. We will bring our wealth of experience in international trade and structured financing as well as our digital banking capabilities – we are particularly proud of our award-winning mobile-only bank, and our leading digital payments provider AFS – which we aim to bring to the Egyptian market.
What is the Group’s plan in the Egyptian market after the acquisition?
Our strategic ambition is to be MENA’s leading international bank. A deep and connected presence in Egypt is key to Bank ABC’s future success, and our plans are to significantly expand and grow our operations after the acquisition. For our corporate and retail customers, this will create a wealth of opportunity as we expand our product and service offerings and leverage our international trade, structured finance and digital banking capabilities in the market (including mobile-only bank ila, digital payments provider AFS). For employees of both Bank ABC Egypt and BLOM Bank Egypt, there are exciting prospects ahead as we merge the banks together, grow rapidly and seek to drive forward our future performance as one unified Bank ABC Egypt brand.
What are the sectors the bank aims to fund in the Egyptian market at the current time? What are other sectors the bank would be funding in the coming period?
Bank ABC has a broad-based portfolio approach to its clients and works across many industries and sectors, including manufacturing, commodities and service sectors. In Egypt, we will also be building out and strengthening the retail, SME and digital capabilities and products of the combined bank. Further detailed plans on our targets for lending and financing activities are in the process of development.
What are the growth rates you aim to achieve after the acquisition?
We see Egypt as a high growth potential market due to its sound fundamentals of economic growth, large and growing population, aspirations for greater financial inclusion, and more. Further plans are in development for the combined bank’s future lending and financing targets, and we will obviously expect to achieve high growth rates given the economic fundamentals and the combined strengths and capabilities we can bring to the market.
What is your geographical expansion plan, both through branches or ATMs? What type of branches are you aiming to establish, larger or small branches?
The acquisition brings a further 41 branches to Bank ABC’s existing network of 28 branches in Egypt, more than doubling our existing footprint. This gives a great boost to our potential for retail, SME and corporate business as we expand our reach across the country. It is too soon to convey our exact plans for our branch network as we need to assess the new portfolio and also consider how our branch footprint will work in conjunction with our digital strategy and distribution capabilities. This is a key element in our integration planning over the next few months.
What is the plan of the bank regarding digitisation?
We believe Bank ABC will be in an even stronger position to play its part in the future development of the banking sector in Egypt, bringing its wealth of experience in international trade and structured financing as well as our digital banking capabilities. We are particularly proud of our award-winning mobile-only bank ila, and our leading digital payments provider, AFS. We have recently obtained regulatory approval to launch a merchant acquiring business, via AFS, to ensure a seamless payment experience for the bank’s clients. Our one-year-old mobile-only bank ila continues to show remarkable growth in its customer base and deposits. We hope to see great future success in Egypt from these activities, as well as increase our focus on digitizing our transaction banking and other wholesale banking capabilities.
What are the most prominent services the bank is offering in the Egyptian market now? What other services do you plan to offer in the coming period?
Both Bank ABC Egypt and BLOM Bank Egypt are full-service commercial banks offering a broad range of banking and other financial products to a wide range of corporate and retail customers. As such, there is a great potential fit between the two banks that can be fully leveraged to create a much stronger combined customer value proposition. There are many such points, but for example, Bank ABC has strengths in international trade, structured financing and its digital propositions – ila and AFS; BLOM Bank Egypt has strengths with a broader corporate business and more depth in products such as retail auto loans and mortgages. We will also be able to draw upon a broader branch network domestically, and enhanced international connectivity for the expanded customer base.
Under a unified brand, the combined entity will leverage all these aspects and expand its services and products to corporates, financial institutions and individuals alike. Developing our detailed strategy and target operating model for the combined bank is one of our key initial objectives over the coming weeks post completion of the acquisition.
How does the bank regard the various initiatives launched by CBE? Would you take part in these initiatives?
Bank ABC has been in Egypt for over 20 years and has a longstanding and strong relationship with the CBE, which has approved our acquisition of BLOM Bank Egypt and will be reviewing our application for the merger and integration of BLOM Bank Egypt and Bank ABC Egypt in due course. We express great thanks to the CBE for its continuing support. Bank ABC has always been and will continue to remain, fully supportive of initiatives launched by the CBE such as those to promote SME business and financial inclusion in the financial services sector. This acquisition will put Bank ABC in an even stronger position to play its part in the future development of the banking sector, leveraging our digital and international trade and financing capabilities.