Arab Banking Corporation signs initial contract to acquire BLOM Bank Egypt

BLOM Bank revealed that it had entered into exclusive discussions with the ABC to sell its 99.42% share

  
Image used for illustrative purpose. People are seen in front of Blom bank in the Fifth Settlement districts of New Cairo

Image used for illustrative purpose. People are seen in front of Blom bank in the Fifth Settlement districts of New Cairo

REUTERS/Amr Dalsh

Daily News Egypt has learned that the Arab Banking Corporation (ABC) has signed a preliminary contract with BLOM Bank to close the acquisition of its Egypt operations.

The banking authorities in both Egypt and Lebanon have been informed of these developments, in preparation for the final contract’s signing soon.

The sources added that expanded meetings were held last week at the level of senior leaders and branch managers at BLOM Bank Egypt, to discuss the bank’s new strategy under the acquisition process.

Some days ago, BLOM Bank revealed that it had entered into exclusive discussions with the ABC to sell its 99.42% share of the total issued capital in BLOM Bank Egypt.

In a brief statement on its website, BLOM Bank said that the two parties will enter into negotiations in this field, but did not confirm the imperative of reaching a final agreement.

The BLOM Bank announced last August that it was considering selling its stake in BLOM Bank Egypt, in light of the severe crisis that Lebanon is going through. It also emphasised the need for Lebanese banks to strengthen their headquarters.

The bank said that the completion of the sale will be subject to obtaining the approval of the Board of Directors at BLOM Bank and the final approval of the Central Bank of Egypt (CBE). This will take place in a manner that guarantees that data confidentiality is preserved, and the rights of BLOM Bank Egypt customers and employees are also preserved in accordance with the relevant laws and regulations.

BLOM Bank affirmed its pride in its Egypt operations and its achievements, results, and growth over the past few years, as it is the BLOM BANK group’s largest asset outside Lebanon. It is also a major tributary to its growth in the region and globally, which could not have been achieved without the efforts and expertise of its employees who are among the most important elements for the bank’s success and expansion in the Egyptian market.

He pointed out that the decision comes in view of the current conditions in Beirut, and the decision of the Banque du Liban No. 13129 of 11/4/2019 regarding the commitment of banks to increase their capital.

Emirates NBD held preliminary discussions with BLOM Bank regarding the possibility of acquiring BLOM Bank Egypt, but no statement has so far been issued by the former confirming its continuation or withdrawal from that deal.

In the same context, BLOM Bank Egypt has completed amending the contracts of 1,000 of its employees in compliance with the CBE’s decisions to protect the rights of workers before the completion of the bank’s sale.

Daily News Egypt learned that the employee wage structure has been amended, and the changing part of the contracts has been fixed in line with the wage structure of workers in the rest of the banks operating in the Egyptian market.

BLOM Bank Egypt employees had requested that the CBE step in to help preserve their rights before the bank’s sale is completed.

In a letter to the CBE, the employees said, “The problem lies in the imbalance of the bank’s current wage structure from what is known in the banking market, where the variable part represents the largest percentage of employees’ annual income (about 55%). The bank has listed the largest part of the total income under variable income, including, for example, the annual incentives that have been transferred to the account of dividends since 2009, and also the amount allocated to compensate employees for high prices after the decision to float, and that is an alternative to increasing the basic salary, as most banks have done.”

CBE Governor Tarek Amer confirmed, in a meeting with a number of BLOM Bank Egypt employees, that he and the CBE are fully committed to the rights of workers in the merged banks and that this matter is a fundamental responsibility to the CBE.

Business results for BLOM Bank Egypt revealed that it achieved profits amounting to about EGP 630.590m by the end of September 2020, compared to about EGP 746.451m at the end of September 2019.

The bank’s profits before taxes amounted to EGP 815.668m at the end of September 2020, compared to EGP 978.678m at the end of September 2019.

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