(MENAFN- Khaleej Times) Emirates NBD, one of the leading regional banks, said on Thursday that it reached an agreement to acquire the Egyptian unit of the largest French bank, BNP Paribas, in a $500 million deal.
The acquisition will allow the Dubai-based bank to expand its regional footprint while helping the French lender shore up its capital.
Under the "definitive agreement" the French lender will sell its entire 95.2 per cent stake in BNP Paribas Egypt to Dubai's largest bank by assets, subject to Central Bank of Egypt approval and other regulatory approvals in Egypt and the UAE.
Emirates NBD, majority-owned by the Dubai government, also has put forward an offer to buy the remaining 4.8 per cent stake from minority shareholders at the same price, the Dubai bank said in a statement to the bourse on Thursday. The deal values the Egyptian unit at $500 million, or 1.6 times its book value at the end of September.
Shaikh Ahmed bin Saeed Al Maktoum, Chairman of Emirates NBD, said the deal represented an excellent opportunity for Emirates NBD to enter the promising Egyptian market and achieve its strategic aspiration of expanding regionally. "It represents an important milestone in our regional growth and we are confident that it will bring successful results to all our stakeholders."
Jean-Laurent Bonnafe, chief executive officer of BNP Paribas, said Emirates NBD would be a strong partner for our Egyptian subsidiary and its staff, as well as for BNP Paribas' clients wishing to access strong on-shore banking capabilities in Egypt.
BNP, France's biggest listed bank, put its business in Egypt on the block in June, seeking to strengthen its capital base and exit non-core operations. Industry sources ENBD had outbid Morocco's Attijariwafabank for the asset.
The takeover of the Cairo-based bank, which owns a network of 69 branches, should close by the end of March, Emirates NBD said. The Dubai bank's shares rose 0.7 per cent to close at Dh2.85 in Dubai on Thursday, trimming this year's drop to 3.1 per cent, compared with an 18 per cent advance in Dubai's index.
The deal comes on the heels of an acquisition of yet another French bank by a GCC bank this month. Qatar National Bank has agreed to pay $1.97 billion for a 77.2 per cent stake of Societe Generele's in Cairo-based National Societe Generele Bank.
Emirates NBD will pay for BNP Egypt with its own cash and doesn't need to inject new capital into the unit, whose capital adequacy ratio is about 17 per cent, a bank official said.
Rick Pudner, Group CEO of Emirates NBD, said the transaction confirmed Emirates NBD's stated strategy and aspiration to be the leading bank in the Mena region. "Egypt is a key market in our region with strong growth prospects. BNP Paribas Egypt provides the Bank with an ideal entry opportunity to this important market and we are committed to further build and invest in the franchise supported by their local management team and staff."
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