Emirates NBD, Dubai’s largest bank, has confirmed it is in preliminary discussions with Lebanon’s Blom Bank for a possible acquisition of the lender’s Egyptian unit.
Blom’s exit plan from Egypt
Earlier this week, Blom Bank announced that it is considering the sale of its Egyptian unit, Blom Bank Egypt, adding that it had received the necessary permission from the Central Bank of Egypt to start the due diligence process.
The bank’s Egypt unit had total assets of $2.73 billion as of March-end 2020 and reported profits of $12.9 million for the first quarter ended in March 2020.
Blom Bank Egypt has a paid-up capital of $125.15 million, according to information on its website. The bank, which provides retail and corporate banking, SME banking and financial institution solutions and services, has a network of 42 branches.
However, in February, Blom Bank Egypt denied that it was considering exiting the Egyptian market, clarifying that selling the bank’s assets in Egypt is not under consideration or negotiations.
Emirates NBD confirmed in a bourse filing that discussions are ongoing and there is no certainty that the negotiations will translate into a deal.
According to Bloomberg, Emirates NBD already has a sizable presence in Egypt following the acquisition of BNP Paribas’ local business in a $500 million deal in 2012.
Emirates NBD reported net profits of $1.1 billion for the first half of 2020, a 45% year-on-year decline compared to the same period last year. The plunge came after the bank set aside the same figure in provisions to cover an expected surge in bad loans due to the global coronavirus outbreak.
The announcement comes months after First Abu Dhabi Bank suspended exclusive talks to acquire Bank Audi’s Egyptian operations earlier this year due to difficult market conditions amid the impact of COVID-19 on the economy.
Similarly, the sale comes as Lebanese banks are trying to shore up their finances to comply with the Banque du Liban’s requirements as the country faces its worst financial crisis in years.