Arab Banking Corporation (ABC) is planning to buy a bank in Egypt and set up another in Algeria in partnership with Arab and international investors, its chief executive says. Both banks will concentrate on corporate and investment banking, and the two investments together will cost ABC about $60 million-70 million. Both projects are part of the Bahrain-based banking group’s plans to expand within the Arab world.
ABC president Ghazi Abdul-Jawad told MEED on 9 September that the group is in the early stages of acquiring Egypt’s Bank of Commerce & Development, known locally as Tigariyoun. ‘We’re still hammering out a few details and then we’ll move to the due diligence,’ Abdul-Jawad said. ABC is still working on a business plan for Tigariyoun. If the deal goes ahead, the bank will focus on securities trading, corporate finance and corporate lending in the Egyptian market. At the moment, ABC’s direct presence in Egypt is limited to a representative office in Cairo.
Tigariyoun, which is listed on the stock exchange but controlled by Egyptian government institutions, has a record of poor performance: as of last June it was carrying £E 30 million ($8.9 million) of retained losses on a balance sheet of about £E 1,000 million ($295 million). The bank is attractive to a foreign institution like ABC, however, because the Egyptian central bank no longer gives out new banking licences. ‘If you want to get into the Egyptian market you need a licence, so you have to accept what’s on offer,’ says an Egyptian banker. Tigariyoun is one of only two state-controlled banks which are for sale but not sought after by foreign investors with a minority stake in them. France’s Credit Agricole Indosuez, which is also looking for a bank in Egypt, has considered buying Tigariyoun (MEED 29:8:97).
The Algerian joint venture will be controlled by ABC, and Abdul-Jawad said that an Arab institutional investor and an international organisation would also be shareholders. He did not name either. ABC is about to put the project to its shareholders – the governments of Kuwait, Libya and the UAE and a number of private investors – and will then apply to the Algerian central bank for a licence. ABC has also considered buying a small Lebanese bank in the past, but is not actively pursuing anything in Lebanon at the moment.