|Byblos Bank completes merger with ABN... - The Daily Star
|Byblos Bank completes merger with local ABN AMRO unit country's largest network of branches just got bigger - The Daily Star.
Bassil vows not to ask Central Bank to help finance deal: 'We will not incur any extra cost on Lebanese citizens'.
Byblos Bank officially announced Tuesday the conclusion of its merger with Dutch bank ABN AMRO's Beirut branch in a deal to be followed in the middle of next year with the opening of a Byblos branch in an Arab country.
Byblos chairman Francois Bassil said in a news conference at the bank's headquarters that the merger was part of a strategy to penetrate new markets.
"We are working on getting licenses in several countries in the Middle Eastern and the North African regions," said Bassil. "We expect to have a branch in an Arab country by June 2004."
On Tuesday, Bassil and ABN AMRO's country representative, Elie Nahhas, announced the conclusion of the merger, which now requires only the Central Bank's approval. Byblos Bank and ABN AMRO refused to put a price tag on the deal, estimated to be worth about $36 million.
Bassil, however, said Byblos Bank would not ask the Central Bank for soft loans, which are usually granted to finance bank mergers in Lebanon.
"We will not incur any extra cost on Lebanese citizens," said Bassil. "The mere fact that ABN AMRO has been a profitable bank proves that the merger was not a bailout." The Central Bank has provided soft loans to bank mergers as an incentive to consolidate Lebanon's crowded banking market. Bassil said foreign banks are leaving emerging countries in order to focus on markets where they have stronger bases.
"Lebanon is a very tight market and it can no longer handle 64 banks," he said.
Byblos, one of Lebanon's top three banks, also plans to issue between $50 and $150 million worth of preferred shares by the end of the year', once it gets Central Bank approval.
ABN AMRO's sale of its Lebanon branch is part of a plan to divest capital employed in emerging markets.
"We are not entering into this transaction because we see a gloomy future for this country," said F. A. Van Cleef, ABN AMRO's regional director. "This is part of an overall strategy."
ABN AMRO, which first entered Lebanon in 1954, has withdrawn from 12 emerging markets in the past two years to focus on core markets.
"ABN AMRO Lebanon stayed on during the (1975-1990) civil war. If it wanted to exit the market due to political turmoil, it would have left a long time ago," said Van Cleef.
The merger with ABN AMRO Bank Lebanon, the second-largest foreign bank in the country, will up Byblos Bank's assets to $5.2 billion and deposits to $4.2 billion, based on figures for the end of September 2002.
The merger will allow Byblos Bank to increase its local network of branches to 70, the largest in the country. The merger is the third such deal in the past 18 months. The Lebanese bank had acquired the small Wedge Bank and the assets of ING Barings' Lebanon branch in 2001.
The merger, according to both banks, is unlikely to leave ABN AMRO's 95 employees in Lebanon bereft of employment.
"We might need such highly trained people to fill posts for banks we may open outside Lebanon," said Bassil. Van Cleef said ABN AMRO has agreed on the size of severance payments for employees who are let go. Bassil said Byblos would benefit from ABN AMRO's strong ties in Saudi Arabia. For that purpose, Bassil is planning to name Nahhas as a candidate for board membership in Byblos Bank at the next general assembly.
Bassil said the bank would continue to look carefully at acquiring other banks or merging with Lebanon's largest banks.
"I am totally convinced that mergers should take place among Lebanon's top banks," said Bassil. "Acquisitions should not be restricted to a big bank acquiring a troubled bank."
As far as Byblos' ambitions to enter foreign markets, it is unlikely to venture much into big markets in Europe.
"We are not that conceited to claim we can enter foreign markets and compete with big local banks," said Bassil. "We have seen how a major bank like ABN AMRO exited certain markets because it could not afford to compete with the local banks."
The Daily Star