Emirates NBD in talks to buy Lebanon’s Blom Bank unit in Egypt

Lebanese banks have to comply with a capital increase requirement as Lebanon faces the worst economic crisis in three decades

Bahrain’s Bank ABC, said it is in talks to buy the Egyptian unit of Lebanon’s Blom Bank. Reuters

Emirates NBD, Dubai’s largest lender, said it is in talks to buy the Egyptian unit of Lebanon's Blom Bank.

"Discussion are still ongoing and there is no certainty that any transaction will be completed," Emirates NBD said in a regulatory filing on Thursday to the Dubai Financial Market, where its shares trade. The lender said it "routinely evaluates potential opportunities in different markets and a further announcement will only be made if there is a material development".

Earlier this week, Blom Bank, Lebanon's second-largest lender by assets, said it is looking to sell its subsidiary Blom Bank Egypt and that the Central Bank of Egypt has given its approval to begin the due diligence process.

Blom said the completion of the sale depends on obtaining the approval of its board of directors and the final approval of Egypt’s central bank. The Lebanese lender has received interest from several banks, according to a source familiar with the matter.

Like other Lebanese lenders, Blom Bank needs to fulfill a requirement from Lebanon's central bank, the Banque Du Liban, which mandates banks increase their equity. The regulator issued the requirement last November as Lebanon faces its worst economic crisis in three decades.

The crisis has led to the value of its currency, which is pegged to the US dollar, to plummet more than 80 per cent in the black market and inflation surging more than 100 per cent in July, according to the the Institute of International Finance.

Blom Bank's 2019 annual profit declined 77 per cent year-on-year as it booked impairments of 493 billion Lebanese pounds ($327 million or Dh1.2 billion at official exchange rate) to cover losses.

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 the unprecedented circumstances and the uncertain outlook relating to the Covid-19 pandemic".

Bank Audi's Egyptian subsidiary has 50 branches with total assets of $4.4bn at the end of September.

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.

Last year, Emirates NBD acquired Turkey's Denizbank from Russia's state-owned Sberbank for about $2.8bn.