BEIRUT: Fransabank has reached a preliminary agreement to acquire Amman-based Ahli International Bank operations in Lebanon for over $100 million, a banking source said Tuesday.
“Ahli Bank has been seeking a buyer for quite some time. Byblos Bank made an offer at the beginning of the year but the talks reached an impasse when both parties failed to agree on a final price. Ahli was looking for a price between $110 million to $120 million at that time,” the source told The Daily Star.
Fransabank issued a brief statement Tuesday saying that it had concluded an agreement with Jordanian Ahli Bank to buy Ahli International Bank.
“The share purchase agreement was signed at Fransabank headquarters in Beirut on May 12, 2014. Fransabank was represented by its Deputy Chairman Adel Kassar, and Jordan Ahli Bank was represented by its Chairman Raja Muashar, in the presence of Chairman Adnan Kassar as well as senior executives and advisors of both parties,” the statement said.
It added that the execution of the sale pursuant to the terms agreed upon was subject to the approval of the Central Bank.
Fransabank officials declined to make any further comment about the deal but said that a full statement detailing the acquisition would be issued soon.
With customer deposits of over $800 million, Ahli has been operating in Lebanon since 1961. In July 2001, the Lebanon branches of Ahli merged with the Bank of Lebanon and Kuwait SAL to form Ahli International Bank SAL, whose head office is located in Bab Idriss in Downtown Beirut. In addition to its headquarters, Ahli Bank has seven branches in Lebanon.
Fransabank’s consolidated net profits in 2013 reached $160.7 million, unchanged from 2012.
The bank’s interest margin was 2.41 percent, down from 2.55 percent in 2012; while its spread fell to 2.28 percent from 2.39 percent also in 2012.
Total operating expenditures increased by 5.8 percent to $246.8 million, with staff expenses rising by 5.8 percent to $154.1 million.
Also, the bank’s return on average assets reached 0.98 percent in 2013, compared to 1.06 percent a year earlier; while its return on average equity was 10.24 percent, down from 11.52 percent in 2012.
The cost-to-income ratio increased to 52.4 percent from 50.8 percent in 2012.
In parallel, total assets reached $17 billion at end-2013, constituting an 8 percent rise from end-2012; while loans and advances to customers grew by 11.7 percent from a year earlier to $5.3 billion.
Customer deposits totaled $13.7 billion at the end of 2013, constituting an increase of 7.2 percent from end-2012.
Bankers said this new acquisition would strengthen the position of Fransabank in Lebanon and increase its market share.
“Fransabank is already among the five leading banks in Lebanon, and this purchase would easily place it in the third spot,” one banker said.
But it is not clear what the fate of Ahli’s employees will be.
Standard Chartered Bank in Lebanon is also in negotiations with Cedrus Invest Bank to sell its retail operations in the country.
Sources expect Cedrus to conclude the deal with Standard Chartered over the next few weeks, once an agreement is reached about the fate of the financial house’s some 100 employees.
The fierce competition among well-established Lebanese banks is one of the main reasons that foreign owned-banks often end up exiting the local market.