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Friday, 06 August 2021

BLOM Egypt initiates sales process following Beirut blast

Doaa A.Moneim , Tuesday 11 Aug 2020
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The Central Bank of Egypt (CBE) has approved the start of the due diligence inspection process for BLOM Egypt Bank, which paves the way for the bank’s sale, the bank announced on Tuesday.

According to a statement sent to Ahram Online, BLOM Bank is considering strategic options including selling its unit in Egypt amid the current situation in Lebanon in the wake of the Beirut blast, as well as a resolution issued by Lebanon’s central bank last November that requires Lebanese banks to raise their capitals.

The bank also said that the sale of its Egypt unit depends on approval from BLOM Bank in Lebanon as well as from the CBE.

“BLOM Egypt has the largest assets owned by the bank outside Lebanon and it’s a key source of the bank’s growth in the region and globally. We are really proud of Egypt’s unit and its achievements,” the bank said in the statement.

An informed source told Ahram Online that BLOM Bank has appointed CI Capital, an Egyptian investment bank, to be in charge of the sales process, adding that there are several offers from other banks to buy BLOM Egypt including Emirates NDB and an unnamed Saudi bank.

In February, BLOM Bank announced that there were negotiations to sell Egypt’s unit. However, the bank later said that it would continue to work in the Egyptian market despite Lebanon’s financial crisis, adding that the negotiations were just offers that were under consideration.

BLOM Egypt’s capital records EGP 2 billion over 42 branches in the country. The bank has branches in 12 countries around the world.

Former Vice President of BLOM Egypt Tarek Metwali told Ahram Online that the challenges and competitiveness the financial market in Egypt is experiencing, especially with the greater role of the non-banking sector, investment banks and fintech companies, require expansion through mergers and acquisitions (MA).

The new Egyptian bank law mandates that bank capitals reach EGP 5 billion (about $300 million), which is a small amount that does not qualify Egyptian banks to exist in regional and global markets. In addition, banks with capital less than EGP 5 billion will struggle to reach such an amount, according to Metwali.

He added that Egyptian banks do not have a presence regionally or globally, and that MA processes are the way to maximise their capital, assets and strengthen their positions.

According to Metwali, the National Bank of Egypt, Banque Misr and the Commercial International Bank are the banks that are qualified for the MA process given their big market share, assets and operations.

He added that national and private banks operating in the Egyptian market have to carry out MA processes to be able to deal with the significant challenges the financial and banking sectors are facing currently.

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