Jordan's Capital Bank begins due diligence to buy Lebanon's Audi's units in Jordan, Iraq

AMMAN (Reuters) - Jordan's Capital Bank EXFB.AM has begun due diligence on buying Lebanese Bank Audi's AUDI.BY> Iraq and Jordan units in an acquisition that will help the Jordanian bank to diversify and expand domestically and regionally, its chairman said.

FILE PHOTO: A woman wearing a face mask walks by a closed branch of Bank Audi after Lebanon declared a state of emergency over the spread of the coronavirus, in Sidon, Lebanon, March 17, 2020. REUTERS/Ali Hashisho/File Photo

Capital Bank said on Sunday in a bourse disclosure that both sides signed a letter of intent to acquire assets and liabilities of Lebanon’s major lender Audi Bank and that it obtained initial approval from both monetary authorities.

“We have begun the process of due diligence and it will take some time, then we come up with an offer. We are agreed on the basic principles,” Bassem Al Salem, chairman of Capital Bank, told Reuters.

Al Salem said he expected a binding offer by end of October “subject to the results of the due diligence”.

Capital Bank, a major Jordanian corporate bank with $3.5 billion in assets by end of June, would be able to diversify into retail banking through acquiring Audi’s Jordan operations with its 15 local branches.

The acquisition of Audi’s unit Iraq would allow Capital Bank to expand in a niche corporate market banking scene where Capital Bank already has a presence through a 62% shareholding in National Bank of Iraq, a retail bank with over $533 million in assets.

“We applied to get both their operations since we are interested in both markets to expand,” Al Salem added.

Some Lebanese lenders are trying to divest non-core assets to fulfill a requirement from Lebanon’s central bank to increase their equity.

First Abu Dhabi Bank (FAB) FAB.AD plans to restart talks to buy the Egyptian business of Lebanon’s Bank Audi AUDI.BY, two sources familiar with the matter said. [L8N2G30AK]

Emirates NBD, Dubai’s largest lender, is currently in talks to buy the Egyptian unit of Lebanon’s Blom Bank.

Reporting by Suleiman Al-Khalidi, Editing by William Maclean