First Abu Dhabi Bank submits binding offer for BLOM Bank’s Egypt unit – sources

First Abu Dhabi Bank (FAB) has made a binding offer to buy the Egyptian unit of Lebanon’s BLOM Bank, sources familiar with the matter told Amwal Al Ghad on Monday.

BLOM Bank is currently studying the proposal to reach an acquisition deal, the sources added.

Earlier, Dubai’s biggest bank Emirates NBD had submitted an offer to acquire BLOM Bank Egypt, the sources said, adding that the negotiating are still ongoing.

BLOM Bank Egypt has 41 branches and a paid-up capital of 2 billion Egyptian pounds ($127 million), according to the Lebanese bank’s website.

In July, BLOM said its net profits dropped by 77 percent in 2019 driven by a financial and economic crisis that hit Lebanon and external auditors had given an “adverse opinion” concerning its financial statements in the country for the year.

Later in August, the Lebanese bank announced it was studying the sale of its Egyptian unit, and that Egypt’s central bank had given it approval to begin the due diligence process. It added then that any sale would have to be approved by the BLOM board of directors.

As a result, Moody’s said in a report released in August that BLOM Bank’s sale of its Egyptian unit would provide much-needed capital enhancement.

The sale would increase BLOM Bank’s capital base and foreign-currency liquidity, a credit positive amid Lebanon’s deep economic, financial, and social crises, according to Moody’s.

“The Egyptian unit was one of the group’s most profitable units last year. Although BLOM Bank would sacrifice diversification, future growth and earnings, the sale could fetch a significant multiple over book value,” Moody’s report read.

Gulf lenders are seeking to expand their market share in Egypt, the Arab world’s most populous country. Some Lebanese banks are attempting to divest non-core assets to fulfil a requirement from Lebanon’s central bank to boost their equity.

FAB, the United Arab Emirates’ biggest lender, plans to restart talks to buy the Egyptian business of Lebanon’s Bank Audi, two sources familiar with the matter told Reuters on Sunday. It will have an internal meeting this week to decide on a way to resume negotiations and put in a final bid.