M&A WATCH- First Abu Dhabi Bank (FAB) has confirmed it is in talks to acquire Bank Audi’s Egypt unit in a statement (pdf) to the Abu Dhabi stock market. The bank said that a “working group” had been set up to evaluate the acquisition and that an agreement is in line with its growth strategy, but stressed that “no valuations have been announced and there is no certainty that these discussions will result in a transaction.”

The portfolio: Bank Audi began operations in Egypt in 2006 and has 50 branches, with total assets standing at USD 4.4 bn as of the end of September, CFO Tamer Ghazaleh previously told Reuters. It reported a 6.5% rise in net profit in 3Q2019, primarily due to an increase in net interest income and gains from financial investments. S&P Global downgraded Bank Audi’s credit rating further into junk status in November amid a liquidity squeeze in the Lebanese banking sector.

Background: Bank Audi said recently that it was in talks with several potential buyers following press reports claiming it was looking to exit the country due to the ongoing financial crisis in Lebanon. FAB was one of three banks that had expressed interest in acquiring Audi’s Egypt unit, the other two being the National Bank of Kuwait and Emirates NBD. Audi had been looking to acquire the National Bank of Greece’s Egypt unit before the Lebanese banking crisis erupted. The banks had reportedly been making headway in the acquisition, despite an NBG employee pay dispute preventing them from obtaining CBE approval.