Arab Banking Corporation (ABC) is planning to take control of its Brazilian affiliate, Banco ABC-Roma, by buying out its local partner, the Roberto Marinho Group. ABC and the Brazilian group have signed a memorandum of understanding for the sale of the latter’s 50 per cent shareholding in the bank and are waiting for approval from the Brazilian authorities.
ABC-Roma, whose main business is in the domestic corporate sector, had assets of
$800 million and shareholders’ equity of
$123 million at the end of 1996. With net income of about $30 million last year, the bank is highly profitable. The Brazilian group is selling out in order to focus on its core business. The deal may go through in two-three months. ‘The conclusion of the transaction will allow the ABC Group to proceed with its strategy of expanding its presence in Brazil, where Banco ABC-Roma has played a key role,’ says a statement from ABC’s head office in Bahrain.
The exact size of ABC’s controlling interest in the Brazilian bank has yet to be decided. An ABC spokesman says it will be ‘substantial.’ The existing Brazilian management will remain and take some of the bank’s equity, and ABC will increase its presence on the board. The bank’s strategy is unlikely to change in the near future, the spokesman says. He adds: ‘We’re trying to promote it to take a bigger share of trade business with the Arab world and other areas where ABC has a presence.’
ABC acquired a 50 per cent interest in ABC-Roma in 1989. It also has a presence in Latin America through its Spanish subsidiary, Banco Atlantico. The region accounts for about 5 per cent of ABC’s earning assets.