Gulf banks to continue seeking toehold in Libya

Dubai: Three Gulf Arab banks have lost out in the bidding for a licence to operate in Libya, but bankers and analysts say such lenders will stay in the hunt as they look to offset slowed growth at home.

"Banks in the UAE, Qatar and the Gulf in general are looking outside their home market in places like Syria and North African countries such as Libya," said a Dubai-based banking analyst.

Two banks from the UAE mashreq and Emirates NBD and one from Qatar Qatar Islamic Bank had been shortlisted for a licence.

Yet only Italy's UniCredit won preliminary approval to open a subsidiary in a decision announced by the Central Bank of Libya on August 9.

"Emirates NBD is very committed to establishing a subsidiary bank in Libya and will continue to discuss options with the regulators in Libya," bank sources said.

"Contrary to previously advised intentions, they will only be issuing one new licence," said John Iossifidis, mashreq's head of international banking.

The bank remains focused on its strategic expansion plans across the region, he said, echoing the statement from Emirates NBD.

Growth markets

Qatar Islamic Bank was not available for immediate comment. HSBC and Standard Chartered had also been shortlisted.

Mashreq, like Emirates NBD and others, is pursuing growth in North Africa where analysts see Libya, with Africa's largest oil reserves, as an attractive long-term opportunity as it continues to open up its economy to foreign lenders.

"They need to look elsewhere. UAE demand for loans will remain subdued for a couple of years, I don't see any catalysts [for that to change]," said Tarek Al Mejjad, a London-based banking analyst for Nomura.

The banking analyst said one step lenders who missed out on the licence could take would be to set up offices in Libya.

"They may look into establishing a representative office which they then can turn into a branch. That is the strategy they should be looking into," he said.