Blom Bank is optimistic about the chances to sell its subsidiary in Egypt. A banking source said on Wednesday that if the transactions succeed, BLOM intends to use part of the money to increase its capital in order to meet the new Central Bank’s requirements.
According to reports, Blom has signed an exclusivity agreement with Bahrain’s ABC Bank, which is responsible for conducting the due diligence, and was given some time to come up with the offer.
A statement by Blom on Tuesday explained that both parties will consequently enter into negotiations in order to reach a final agreement. However, there is no certainty that any transaction will be completed.
“Blom Bank owns 99.42 percent of the issued share capital of Blom Bank Egypt,” the statement said.
In September, Bahrain’s ABC said it was in preliminary talks to buy Blom Bank’s Egyptian subsidiary.
The source said that the prices in question for Blom’s subsidiary in Egypt will remain confidential until the talks are finalized.
Interestingly, Blom was also approached by UAE’s Emirates Bank but ABC Bank showed more willingness to procure the bank in Egypt.
The Central Bank had called on banks, in August of this year, to increase their capital by 20 percent by the end of February 2021. “Blom is capable of meeting the new requirement and the bank will definitely use part of the new transaction to boost its private equity,” the source said.
“If the transaction materializes, the new cash injection will be more than Blom’s investment in Lebanon. The new cash will also boost Blom’s foraging currency liquidity abroad,” the source added.
According to Blom, most of the profits were made from their operations outside Lebanon, especially Egypt as 60.7 percent of the consolidated profits came from there.
Lebanon is struggling against a year full of consecutive political and financial crises that have paralyzed its banks, sunk the currency, and fuelled poverty and unemployment.
Blom also has a subsidiary in Jordan but there are no plans yet to sell their operations there.
