May 21, 2015 / 10:57 AM / 4 years ago

UPDATE 3-Kuwait's Al Ahli Bank buying Piraeus Bank Egypt for $150 mln

* Al Ahli Bank to use own cash resources for buy

* Deal at 1.5x book value, to boost Piraeus CET-1 ratio by 30 bps

* Greek banks offloading assets to boost finances

* Gulf banks seeking deals amid competition at home (Adds statement from Piraeus, further information from source)

By Ahmed Hagagy and David French

KUWAIT/DUBAI, May 21 (Reuters) - Kuwait’s Al Ahli Bank will pay $150 million cash for a 98.5 percent stake in Piraeus Bank’s Egyptian unit, a deal which will support its regional expansion and give the Greek lender a much-needed boost to liquidity.

The purchase, struck at 1.5-times Piraeus Bank Egypt’s (PBE) book value at the end of 2014, still requires regulatory approval in Egypt, Greece and Kuwait, as well as approval from the Hellenic Financial Stability Fund, according to a bourse filing in Athens.

Kuwait’s seventh-largest bank by assets will also acquire at par value loans worth 23 million euros ($26 million) from Piraeus Bank which are related to its Egyptian operations, as part of the agreement, the Greek lender added.

“(Buying it) will cost us $150 million, which is not a great sum for us. We will finance the deal from our sources,” Fawzy al-Thunayan, general manager of board affairs at the bank, told Reuters.

Thunayan added the deal would help with the bank’s regional expansion, but declined to talk about specific plans for PBE.

PBE, which was bought by Greek lender in 2005, has 39 branches and total assets worth 9.66 billion Egyptian pounds ($1.27 billion) at the end of March, according to its website.

Al Ahli Bank (ABK), with assets worth 3.58 billion dinars ($11.86 billion), has branches in Kuwait and the United Arab Emirates, according to its website.

MUTUAL BENEFIT

Both lenders stand to benefit from the transaction, which was struck after initial enquiries from more than five lenders from the Middle East and North Africa was whittled down to at least two final bids by the Egyptian central bank around three weeks ago, according to a source aware of the matter.

Greek banks have been offloading assets as they seek to cope with the country’s debt crisis, with concerns increasing in recent weeks that banks’ liquidity is drying up as Greece’s government tries to renegotiate with its creditors.

Piraeus’ common equity tier 1 ratio will be boosted by around 30 basis points from the March 31 level, with the bank receiving additional liquidity worth around 200 million euros, the Greek bourse statement said.

For the Kuwaiti lender the deal is the latest in the North African country by Gulf Arab banks looking to expand beyond their highly competitive domestic markets and increase their profitability.

Qatar National Bank and Dubai’s Emirates NBD bought the Egyptian operations of different French banks in 2013, while Gulf lenders are heavily featured among suitors in the sale of Citigroup’s consumer banking business.

Shares in Piraeus closed 3.2 percent higher, while ABK ended flat. The announcement was made after market hours in Kuwait.

Mediobanca advised Piraeus on the deal, its bourse statement said, while two sources aware of the matter said JP Morgan advised ABK.

($1 = 7.6250 Egyptian pounds)

($1 = 0.3019 Kuwaiti dinars)

$1 = 0.8989 euros Additional Reporting by Reem Shamseddine; Editing by David Holmes and Elaine Hardcastle

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