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Thursday, 21 January 2021

The Great Lebanese Bank Sell Off: Act II

FAB is acquiring Bank Audi’s Egypt arm: First Abu Dhabi Bank (FAB) has signed a final agreement to acquire 100% of Bank Audi’s operations in Egypt and expects to complete the transaction in “the next few months,” the banks said in a statement yesterday.

We don’t know how much FAB is paying: The banks didn’t disclose the value of the transaction. Chatter had previously put it in the neighborhood of USD 700 mn.

FAB will become one of the largest foreign banks in Egypt: The Emirati lender assets will increase to EGP 120 bn (c. USD 8.1 bn) post-acquisition, making it one of the largest banks in Egypt in terms of assets, the statement said. FAB’s branch count will more than triple to 70, adding Bank Audi’s 53 branches to its existing 17. Audi’s total assets were valued at EGP 83 bn (USD 5.3 bn) at the end of 3Q2020.

Audi is going through tough times back in its home market: S&P and Moody’s both downgraded Audi’s credit rating further into junk status in 2019 following protests that threw the country’s banking sector into a liquidity crisis. The transaction “represents a strong vote of confidence” in the bank’s governance and business model, bank chairman and CEO Samir Hanna said.

What happens now? The acquisition is pending several procedural approvals from within the banks and final regulatory approvals from the Egyptian and Emirati central banks, the banks said.

ADVISORS- EFG Hermes is sole financial advisor to Audi, with London law firm Dechert and Zulficar & Partners acting as legal advisors. FAB itself and UBS Group AG’s London arm provided financial advisory services to FAB, and Matouk Bassiouny and Freshfields Bruckhaus Deringer were legal counsel.

That was Act II — but what happened in Act I? Another struggling Lebanese bank Blom also signed a final agreement to sell off its Egypt assets earlier this week. Bahrain’s Bank ABC agreed to purchase the subsidiary for EGP 6.7 bn and hopes to finalize the transaction during the first half of 2021.

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