Lebanon’s Bank Audi open to sale of Egyptian unit in new strategy

Bank Audi is also proceeding with an equity increase which the central bank has instructed all Lebanese banks to implement to help weather the crisis. (Reuters)
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Updated 14 January 2020

Lebanon’s Bank Audi open to sale of Egyptian unit in new strategy

  • Bank Audi is also proceeding with an equity increase which the central bank has instructed all Lebanese banks
  • Bank Audi Egypt has grown from a three-branch operation acquired by Bank Audi in 2005 to 50 branches today

BEIRUT: Lebanon’s Bank Audi is considering selling its Egyptian subsidiary after receiving interest from lenders, its chief financial officer told Reuters, indicating a possible strategy rethink as Lebanon grapples with a financial crisis.
Bank Audi is also proceeding with an equity increase which the central bank has instructed all Lebanese banks to implement to help weather the crisis, the country’s worst in decades.
Finance chief Tamer Ghazaleh said Bank Audi will call a shareholder meeting for the second week of February to vote on the equity raising and he was confident of securing shareholder support.
Bank Audi is “doing the equity increase and independently considering discussing with parties selling Bank Audi Egypt at the right price,” he said in an interview late on Monday.
“For us, we would not have considered thinking of it if the situation was different in Lebanon. We have our own ambition and expansion plan in Egypt,” he said, referring to a potential sale of Bank Audi Egypt.
Since Lebanon’s crisis began, the bank has received several calls from investment bankers “trying to support us if we want to sell foreign assets as a way of increasing the capitalization and liquidity of the Lebanese operation,” Ghazaleh said.
“The appetite of investors was higher for Egypt. We did not reach any agreement with any party to do a transaction but we are considering this — if we get the right offer,” he said.
Bank Audi Egypt has grown from a three-branch operation acquired by Bank Audi in 2005 to 50 branches today with total assets of $4.4 billion at the end of September, Ghazaleh said, calling it “a very profitable operation.”
“For us, we would not have considered thinking of it if the situation was different in Lebanon. We have our own ambition and expansion plan in Egypt,” he said.
If Bank Audi decided to sell, it would still require board and regulatory approval, he said.
Lebanon’s biggest bank by total assets has expanded in the region since 2005 and has operations in 10 countries in the Middle East and North Africa, including its fully owned subsidiary Bank Audi Egypt.
Lebanon’s central bank instructed banks in November to raise their Common Equity Tier 1 capital, a key measure of financial strength, by 10% through cash injections by the end of the year and a further 10% by June 30 this year.
Bank Audi had enough shareholder support to secure approval for the equity increase, Ghazaleh said. “We are comfortable with the level of commitment of the large shareholders for this increase. We have enough support to call for the (shareholder meeting) soon,” he said.
Across Lebanon’s banking sector, a 20% equity increase should raise $4 billion, representing 2% of the banking system.
Lebanon’s central bank governor Riad Salameh said in a televised interview last week that most banks had informed the central bank that they had started steps to implement the increase.
Bank Audi had told the central bank it would need some additional weeks beyond the Dec. 31 deadline to complete the first part of the increase due to its complexity and the short time frame, Ghazaleh said, noting its listing on two stock exchanges and over 1,500 shareholders.
Bank Audi aims to raise $311 million in the first part of the increase.
“The first point is to regain the confidence of the market. The shareholders want to show to the market and customers their willingness to support their organization by any necessary means. It is to show commitment,” he said.
“The second point is that any capitalization will always be beneficial to maintaining the solvency of the banking system.”


Big oil feels the heat on climate

Updated 22 January 2020

Big oil feels the heat on climate

  • Trump singles out ‘prophets of doom’ for attack as industry leader promises global forum: ‘We will be different’
  • Greenpeace told the Davos gathering that the world’s largest banks, funds and insurance companies had invested $1.4 trillion in fossil fuel companies since the Paris climate deal

LONDON: Teenage environmental activist Greta Thunberg slammed inaction over climate change as the global oil industry found itself under intense scrutiny on the opening day of the World Economic Forum in Davos.

The teenage campaigner went head to head with US President Donald Trump, who dismissed climate “prophets of doom” in his speech.
She in turn shrugged off the US president’s pledge to join the economic forum’s initiative to plant 1 trillion trees to help capture carbon dioxide.
“Planting trees is good, of course, but it’s nowhere near enough,” Thunberg said. “It cannot replace mitigation. We need to start listening to the science and treat this crisis with the importance it deserves,” the 17-year-old said.
The 50th meeting of the World Economic Forum was dominated by the global threat posed by climate change and the carbon economy.
The environmental focus of Davos 2020 caps a year when carbon emissions from fossil fuels hit a record high, and the devastating effects of bushfires in Australia and other climate disasters dominated the news.
Oil company executives from the Gulf and elsewhere are in the spotlight at this year’s Davos meeting as they come under increased pressure to demonstrate how they are reducing their carbon footprint.
“We are not only fighting for our industry’s life but fighting for people to understand the things that we are doing,” said Vicki Hollub, CEO of Occidental, the US-based oil giant with extensive oil operations in the Gulf. “As an industry when we could be different — we will be different.”

‘Planting trees is good, but nowhere near enough,’ activist Greta Thunberg told Davos. (Shutterstock)

She said the company was getting close to being able to sequester significant volumes of CO2 in the US Permian Basin, the heartland of the American shale oil industry which is increasingly in competition with the conventional oil producers of the Arabian Gulf.
“The Permian Basin has the capacity to store 150 gigatons of CO2. That would be 28 years of emissions in the US. That’s the prize for us and that’s the opportunity. People say if you’re sequestering in an oil reservoir then you are producing more oil, but the reality is that it takes more CO2 to inject into a reservoir than the barrel of oil that it makes come out,” Hollub said.
The challenge Occidental and other oil companies face is to make investors understand what is happening in this area of carbon sequesteration, she added.
The investment community at Davos is also looking hard at the oil industry in the face of mounting investor concerns.
Greenpeace told the Davos gathering that the world’s largest banks, funds and insurance companies had invested $1.4 trillion in fossil fuel companies since the Paris climate deal. It accused some of these groups of failing to live up to the World Economic Forum goal of “improving the state of the world.”