Mashreq Eyes Turkey, Egypt for Acquisitions

Big 5

Dubai’s Mashreq is targeting Egypt and Turkey for acquisitions to expand beyond its crowded home market, its chief executive told Reuters as he dismissed suggestions that it could be interested in any of Standard Chartered’s assets in the United Arab Emirates.
A number of local banks had been held up as potential buyers of UAE operations that sources said Standard Chartered was aiming to sell after it agreed to close some accounts there in an anti-money laundering settlement with authorities in the United States.
But Mashreq, Dubai’s third-largest bank by assets, has no interest in any of the British lender’s UAE operations, CEO Abdul Aziz Al-Ghurair said on the sidelines of a company event in Dubai.
“We prefer in the UAE to grow organically. None of our growth in the UAE has happened through acquisition,” he said.
Instead, the company is looking to join an increasing number of Gulf lenders snapping up banking stakes in other countries to diversify in the face of intense competition at home, where 51 lenders battle for market share.
Mashreq is looking at buying controlling stakes in banks in Egypt and Turkey, Ghurair said, though he declined to name specific targets and said that any deal would not happen until next year.
Several Gulf banks have already done deals in these countries in the past two years, where growing populations are spurring appetite for consumer and corporate banking products.
Emirates NBD bought the Egyptian assets of BNP Paribas, while Qatar National Bank agreed to buy Societe Generale’s Egyptian operations. In Turkey, Kuwait’s Burgan Bank acquired the Turkish arm of Greece’s EFG Eurobank, while Commercial Bank of Qatar has a majority stake in Alternatifbank. “Egypt has a big population, there is potential there,” Ghurair said. “We see a lot of Gulf banks have gone there — they’ve done very well.” Mashreq already has 10 branches in Egypt and 20 percent of its profit is derived abroad, he said.
Valuation and structure are the top priorities for Mashreq when considering an acquisition in either Egypt or Turkey, Farhad Irani, Mashreq’s group head of retail banking, told Reuters at the same event.
The bank expects loan growth in 2014 to be at its highest level in seven years, at between 11 and 15 percent, Ghurair said. The bank’s total lending rose 11 percent in the first half of the year, it reported in July.
Banks are benefiting from a resurgence in the UAE economy, which is recovering from the bursting of a property bubble at the end of the past decade. Economists forecast the economy to grow by 4.3 percent this year.

Source: Reuters