UPDATE 1-Bahrain's ABC joins race to buy Blom's Egypt business

(Adds advisory role, details of Egypt presence)

DUBAI, Sept 8 (Reuters) - Bahrain’s Bank ABC said on Tuesday it was in preliminary talks to buy Blom Bank’s Egyptian subsidiary, pitting it against Dubai’s Emirates NBD which is also a potential bidder.

Blom has hired CI Capital to advise on a sale that could fetch $250 million to $300 million as the Lebanese lender tries to boost its capital, Reuters reported last month, citing two sources familiar with the deal.

Blom had approached potential bidders including Dubai’s biggest bank, Emirates NBD, the sources said. Emirates NBD confirmed on Aug. 13 it was interested.

HSBC is advising Bank ABC on the talks, two sources familiar with the deal told Reuters. HSBC declined to comment.

Lebanese banks are trying to strengthen their finances as the country endures its worst financial crisis since the civil war.

Blom’s domestic rival Bank Audi tried to sell its Egyptian business, but the deal stalled in May after First Abu Dhabi Bank halted talks, citing the uncertain outlook relating to the COVID-19 pandemic.

FAB plans to restart talks to buy the Egyptian business of Bank Audi, Reuters reported this week

Both Emirates NBD and Bank ABC have an existing presence in Egypt, seen as a lucrative banking market because of the North African country’s large population and consumer demand.

Bank ABC in Egypt has a network of 28 branches spread across major cities including Cairo, Alexandria, Sharm El-Sheikh and other key centres, according to its website.

In the Gulf region, low oil prices and weak economic growth are driving banks to merge and larger lenders to look outside the region for acquisition targets.

Ratings agency Moody’s said in July it expects real non-oil GDP in the Gulf region to contract by between 3.5% and 5% in 2020, which will erode loan demand and banks’ appetite to lend. (Reporting by Saeed Azhar; Editing by Susan Fenton)