Lebanon’s Blom Bank has started an exclusive discussion with Bahrain’s Arab Banking Corporation (Bank ABC) to potentially sell the ownership of its Egyptian subsidiary.
According to a brief statement from Blom Bank, “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.” Further announcements will be made in due course of time, it added.
In September, Bahrain’s second-largest lender Bank ABC had revealed that it has entered into preliminary talks with Blom Bank Egypt. The announcement came a month after Emirates NBD said it was carrying out auditing for a possible acquisition.
Earlier, Blom Bank had declared that it was considering a potential sale of its stake in the Egyptian wing in response to the depressed outlook for Lebanon’s domestic banking industry.
Like other lenders, Blom Bank also has to fulfill the Lebanon central bank’s order to boost the 20 percent capital of every bank in the country by the end of February 2021. The financial institutions which fail to meet the requirement will have to go out of the market.
In October, the listed Lebanese banks, including Blom Bank, posted their worst financial fall over years, with a combined net after-tax loss of $770.4 million in 2019, compared to a net profit of $1.44 billion the previous year.
The Lebanese economy is in a downward spiral after defaulting on about $31 billion of Eurobonds in March. The banks of the country are also struggling to raise their finances as the Arab nation combats the worst economic crisis in decades.
