BLOM buys
HSBC Lebanon

Deal value: $129-$144 million

BLOM Bank has signed an agreement to acquire HSBC Bank Middle East Limited – Lebanon for a value that is likely to range between $129 million and $144 million. The deal is expected to be completed in the first half of 2017.

The value constitutes the bank’s goodwill and equity. The goodwill includes the value of HSBC’s business and the improvements in the value of the bank’s real estate properties.

“We placed a ceiling of $69 million on the price for the goodwill,” said Saad Azhari Chairman of BLOM Bank.

The equity value could range between $60 million and $75 million, depending on how much HSBC decides to keep of its local equity, and how much profit will be recouped for the Dubai unit, he said.

HSBC’s local assets stood at $953 million at the end of June 2016. BLOM is buying both the bank’s assets and liabilities.

According to Azhari, all HSBC employees will be kept on. “It was one of our conditions for acquiring the bank’s local business,” he said.

HSBC’s local business was profitable. It was involved in lending to the private sector, both the retail and corporate segments, but did not invest in treasury bills. It had strength in foreign trade financing. HSBC-Dubai supervised the local branches, for which they were paid management fees. Azhari said that the fees will be removed after the acquisition. This is expected to help improve profitability of these branches.

According to Azhari, HSBC's local client portfolio is excellent and BLOM is expected to benefit from HSBC’s historical relations within the local market, developing them further.

“This acquisition falls under BLOM Bank’s strategy of expanding its customer base and diversifying its assets and revenues. The transaction will help BLOM Bank expand its corporate and commercial businesses as well as its retail activities,” BLOM said in a statement.

HSBC entered the local market in 1946 and operates three branches in Dora, Ras Beirut, and St Georges Bay.
BLOM expects its full-year net profit to rise by the same growth rate achieved in the first nine months.