Dubai: Less than a year after it sold its stake in Lebanon's biggest lender Banque Audi, Egypt's EFG Hermes yesterday said it paid $542 million (Dh1.9 billion) for 65 per cent of Beirut-based bank Credit Libanais.
Under the agreement, EFG will also have a call option to buy an additional 25 per cent interest in privately-owned Credit Libanais over the next two years, on the same terms and pricing as the initial deal, EFG said in a statement.
"The acquisition will be financed from EFG Hermes' own cash resources and will not require any external funding," it added.
Chairwoman Mona Zulficar said the deal "will transform EFG Hermes and facilitate the expedient roll-out of our regional commercial banking strategy."
Ambition
Analysts said the buy fits well with EFG's ambitions to expand regionally, and as a return to Lebanon after disposing its stake in Bank Audi earlier this year.
"The intention of EFG-Hermes has remained the same since a couple of years back, and that's not to acquire a Lebanese commercial bank per se but to create a universal banking model," said Ghida Obaid, an analyst at Shuaa Capital.
The acquisition will also be positive for the bank's earnings, Obaid said. "With volatile markets such as these and 1Q fee income being hampered by the adverse market conditions, having such a fixed revenue line will assist in stabilising net profit and operating income," she said.
EFG said the acquisition will give it a significant footprint in Lebanon with "further expansion potential in the Levant area."
Credit Libanais — whose management team will remain after the acquisition has the third largest distribution network in Lebanon and an overall market share of about 5 per cent.