Lebanese Swiss Bank,
Pharaon and Chiha to merge?

As rumors spread, talks
between parties are confirmed

The Lebanese Swiss Bank (LSB) is in closed talks with Raymond and Teddy Rahme of the ZR Group Holding, who would like to purchase 15 percent of the bank.

The Rahme brothers reportedly agreed, last October, to acquire 80 percent of the shares of Pharaon & Chiha, but the deal was suspended when the Central Bank (BDL) expressed unofficial reservations based on the Rahmes’ lack of experience in banking.

The new structure being circulated is for the Lebanese Swiss Bank to sell up to 15 percent shares to the Rahmes, who would also contribute with their intended acquisition of Pharaon & Chiha, leading to a de-facto merger. In this case, the Rahmes would be allowed a maximum of 35 percent ownership in the merged entity, after a capital increase.
The reported agreement between Naji Pharaon and the Rahme brothers has not been officially announced, nor was a request for approval made to BDL.

The Rahmes had agreed to purchase the shares of Pharaon & Chiha, owned by Naji Pharaon and his family. The remaining shares will stay with the bank’s other shareholders, Pierre Doumit with 14 percent and Henri Helou with five percent. They are not being involved in the talks. Both banks are currently profitable.

Banque Pharaon and Chiha is one of the oldest banks in the country. Its assets reached almost $300 million at the end of 2013. Customer deposits totaled $238.5 million and loans amounted to $91.6 million. Its net profits were $4.9 million. Its shareholder equity amounted to $16.7 million. The bank consists of a head office and five branches.

The Lebanese Swiss Bank’s major shareholder is Tanal Sabah and his family, who jointly own two thirds of the bank’s shares. Other shareholders include the heirs of Hussein Hoballah (11 percent), Khater Abi Habib (ten percent), Abdullah Al Azel (five percent), and others. It was licensed in 1962. In 1973, it was acquired by Credit Suisse and renamed Credit Suisse (Moyen Orient) and sold in 1988 to the current shareholders, becoming Lebanese Swiss Bank. The bank has 19 branches. At the end of 2014, it had $1.6 billion in assets. Customer deposits totaled $1.4 and loans amounted to $391 million. Its net profits were $14 million.

ZR Group Holding’s portfolio spans many industries, including banking and finance, media, IT and telecom, aviation, trade and commerce, transportation, catering, logistics and support, and real estate. Its annual turnover is estimated at $500 million.