Manama, Bahrain: Arab Banking Corporation (B.S.C.) (“ABC”) today announced that it has entered into an agreement to acquire a 49% ownership stake in Mediterranean Bank S.A.L., a Libyan bank headquartered in Benghazi, in the North East of Libya, and with branches in Tripoli and Misurata. The acquisition, which is subject to final regulatory approval from the Central Bank of Libya, is expected to close before the end of the first quarter of 2011. ABC will also manage the bank on a day-to-day basis pursuant to a management agreement.
Mediterranean Bank was established in 1997 and operates under the supervision of the Central Bank of Libya. It provides retail and corporate banking services.
The transaction will see ABC inject additional capital of Libyan Dinars 74 million
(approx. US$60 million) into Mediterranean Bank in return for receiving a 49% shareholding in Mediterranean Bank. Following the completion of the transaction, ABC will have the right to appoint three directors (out of a total of seven) to the board of Mediterranean Bank.
ABC currently undertakes a significant level of business relating to Libya, having established the first ever representative office of a foreign bank in Tripoli back in 1988. The acquisition of an equity stake in Mediterranean Bank therefore constitutes a natural extension of ABC’s existing business in North Africa. ABC intends to invest considerable resources in integrating Mediterranean Bank into the ABC network, drawing upon ABC’s North African and international expertise to enable Mediterranean Bank to significantly grow its business over the medium term, within a robust ABC Group risk management framework.
Hassan Ali Juma, President and Chief Executive of ABC, commenting on the transaction said: “I am delighted that we have agreed to form a strategic partnership with Mediterranean Bank. The acquisition by ABC of a 49% hareholding in Mediterranean Bank represents a unique opportunity to cement the geographic reach of ABC’s existing North African businesses, which already include operations in Egypt, Tunisia and Algeria, and will provide ABC with access to the increasingly important Libyan banking market. I am confident that Mediterranean Bank will, with the support of the ABC Group, establish itself as one of the leading banks in Libya, as the competitive landscape in Libya evolves as a result of the recent opening of the banking market to foreign capital.”
N.B: In 2010, ABC entered into an agreement to acquire a 49% equity stake in Libyan-based Mediterranean Bank. However, the conditions precedent to the completion of the acquisition were not satisfied by Mediterranean Bank by 31st January 2011 (the contractually required cut-off date) and, therefore, ABC is no longer obligated to complete the acquisition.
In view of recent events in Libya, it is not expected that ABC will take any steps to complete the acquisition in the near future.