National Societe Generale Bank (NSGB), the local subsidiary of Societe Generale (SocGen), has acquired a majority stake in partly state-owned Misr International Bank (MIBank). The acquisition of Egypt's second largest bank in terms of assets will result in the formation of the country's biggest private sector bank, with total assets worth about£E 30,000 million ($5,200 million - MEED 5:8:05).
NSGB, which is 78 per cent owned by SocGen, acquired the MIBank stake, having offered the highest price per share at £E 43.20 ($7.48). So far, 69.7 per cent of MIBank shareholders have agreed to sell their stakes at the proposed price. NSGB has agreed to buy at least 75 per cent of MIBank shares at the same price. 'This is a fair price and translates into a good transaction for both sides,' says a Cairo-based banking analyst. The only other bidder for MIBank, BNP Paribas, offered a price of £E 42 ($7.27) a share. At the end of the first half of the year, NSGB and MIBank held assets worth £E 11,919 million ($2,071 million) and £E 17,936 million ($3,117 million) respectively, which combined make the bank the largest in the private sector, ahead of Commercial International Bank (CIB- see table). NSGB has 39 local branches while MIBank has 30 with a further five under construction. The acquisition is expected to create numerous synergies for both banks by utilising common IT platforms and branches. 'NSGB is on the smaller side in terms of assets, portfolio and customer deposit base,' says Ahmed el-Ashram, financial analyst at the local HC Brokerage. 'But it has the better loan quality.' No details have yet been released on how NSGB will finance the acquisition, although sources close to the transaction say that the deal will be financed by equity rather than debt. 'A capital increase at NSGB is expected,' says the source. 'But no bond issues will be launched to finance it.' NSGB's sole adviser on the transaction was EFG-Hermes. The next major development in the banking sector is expected to be the sale of the combined 74.7 per cent stake held by Bank of Alexandria (BoA) and American Express (Amex)in Egyptian American Bank. Credit Suisse First Bostonhas been appointed as adviser on the deal, which is expected in the fourth quarter. It will be followed by the privatisation of BoA, the country's fourth largest state-owned bank, in the first half of 2006. BoA is being advised by Citigroup (MEED 12:8:05).