Credit Libanais pursued
by two additional suitors

Cedrus and BIT ready to offer more

Two banks are willing to pay Egypt-based EFG Hermes a higher price than it has already received for its 63.7 percent stake in Credit Libanais. The offers are contingent on positive due diligence results. Both Cedrus Invest Bank (CIB) and BIT Bank are independently still pursuing the acquisition of a majority stake in Credit Libanais – despite an initial announcement of granting the deal to the bank’s chairman’s group of investors.

EFG Hermes is offering Credit Libanais’ share for $33, which values its entire stake in the bank at $492.2 million. Credit Libanais Investment Bank (CLIB) was granted an exclusive mandate to sell the stake and has so far succeeded in arranging the sale of 40 percent of the bank’s equity to Lebanese and Arab investors, said Joseph Torbey Chairman of Credit Libanais. “The investors who bought the 40 percent stake also have the appetite to acquire the remaining 23.7 percent. We expect the sale to be closed very shortly,” Torbey said.

Raed Khoury, CIB’s Chairman, said: “The sale of EFG Hermes’ stake in Credit Libanais is not a done deal yet. Our bank, as well as BIT, is still in the race.” CIB and BIT were talking separately to EFG Hermes. Each of the two banks was interested in acquiring EFG Hermes’ entire stake in Credit Libanais. CIB is seeking to buy a commercial bank or a majority stake in a bank for an amount ranging from $100 million to $500 million in order to merge it with its commercial banking arm Cedrus Bank. “The stake should represent about two thirds of the capital of the bank that will be acquired because this gives us voting power to implement the merger,” Khoury said. CIB is a small bank, but it is able to bid for a bigger bank because it has a strong shareholder base and a good management team, according to Khoury. “Our existing shareholders are deep-pocketed and able to increase the capital by at least $350 million,” he said. The bank could raise additional funds from new shareholders as well.

The offering of the 40 percent stake was closed on March 11, Torbey said. The bids that meet the offering’s requirements and that are in agreement with BDL’s guidelines were accepted. The prerequisites for the share sale include having prime investors, as well as the condition that the deal should be in line with the growth strategy of Credit Libanais, he said.

“We need to merge with another bank because size matters in commercial and retail banking,” Khoury said. CIB now owns 85 percent of Cedrus Bank, the remaining 15 percent is held by Nicolas Chammas. In the past 30 years, most of the big banks have grown through mergers and acquisitions. Most of them were financed – at subsidized rates – by the Central Bank (BDL). Mergers between the top banks are frowned upon by BDL. Its logic lies in promoting competition and avoiding having a bank so large that its fall would be impossible to prevent.