The International Finance Corporation, the investment arm of the World Bank, is finalizing a deal to acquire a 10 percent stake in Banque Saradar with the proceeds going to increasing the capital of the bank.
Saradar officials have confirmed that they are negotiating with the IFC but say that a final contract has yet to be signed. Mohsen Khalil, head of the Middle East section at the IFC, is expected in Lebanon soon.
A banker close to the negotiations said that the deal will involve the IFC buying Banque Saradar France as a first step. Saradar France, a legally independent sister bank in Paris, is 70 percent owned by the Saradar family and is regulated by Banque de France. The remaining 30 percent is held by AGF, the French group which recently acquired an indirect share in SNA insurance group.
IFC will introduce a new and reliable institutional investor to the family-dominated Banque Saradar considered by ratings agencies to be well run but short of working capital, which stood at around $18.6 million last year.
Saradar nonetheless is a main player in the Lebanese government debt market and has strong trade finance relationships with and deposits from the Gulf. The bank made $9.02 million profit last year. Assets reached $798.2 million 13th in the country.
IFC officials said they are willing to invest at least $150 million every year in Lebanon. Their negotiations have involved talking to Ark, the new investment group which established the United Bank of Lebanon last month. Ark is headed by Safi Harb, a former IFC official and general manager of the Middle East Capital Group (MECG). Local bankers have suggested that the IFC involves itself in local bank mergers and acquisitions.
The agency has praised the Byblos and Banque Beyrouth pour le Commerce merger last year and hopes that declining profits from Treasury bills will encourage the chairmen of smaller banks to give up their seats and merge or be bought.
The IFC is credited with creating the housing loan market here, providing more than $160 million to help finance smaller firms and house buyers. The fund has a $3 million stake in MECG.