Wholesale banking offers greatest potential for Dubai-based bank
Libya banking in numbers
$60bn: Value of Libya’s planned infrastructure expenditure in next few years
18: Foreign bank’s representative offices in Libya
Source: Libya Central Bank
Dubai-based bank Emirates NBD has resumed talks with the Central Bank of Libya (CBL) with the aim of establishing a presence in the country after it lost out in a licence bidding round, which closed in July this year.
“We’re in dialogue with the regulators about possible options,” says Kevin Flannery, general manager of international expansion at Emirates NBD.
“We are looking at opening a representative office, but we’re particularly interested in partnering with a local private bank.”
Flannery says the key opportunities lie in wholesale banking, especially project finance for infrastructure development in the oil sector, as well as schools, hospitals and railways.
“Libya has set up an infrastructure investment fund with a seed capital of $8bn and there are huge projects being undertaken, especially the construction of the $5bn Energy City Libya project and the high-speed railway linking the country’s main cities along the Mediterranean coast,” he says.
“These projects desperately need local advisory, but there is no expertise on the ground to develop such mandates, which is why there is so much foreign interest there right now.”
Libya is also proving attractive over other countries in the region, because along with having Africa’s largest oil reserves, its banking industry is still in a nascent stage of development.
Gulf banks’ single-digit loan growth is forcing them to now look outside their home market – the UAE’s Mashreqbank and Qatar’s Qatar Islamic Bank (QIB) also submitted bids for a licence in Libya, along with the UK’s HSBC and Standard Chartered, also of the UK.
Only Italian bank UniCredit won preliminary approval to own a 49 per cent stake in a new greenfield bank in a decision announced by the central bank on 9 August. The bank will also have management rights.
Current Libyan regulations prohibit foreign banks from opening a branch.
“The fact that it is a greenfield project means there are no legacy issues to deal with, they can bring in their own systems and staff, so it is a lot easier to get up and running,” says Flannery.
“Libya has done a complete u-turn in the last few years in going from nationalising everything to a focus on de-nationalising.”
The first bilateral agreements between a Libyan and foreign bank was signed in 2007 when France’s BNP Paribas bought a stake in the state-owned Sahara Bank. A year later, Jordan’s Arab Bank bought 19 per cent of Wahda Bank.
There are currently five national banks and nine private banks in Libya.