Gulf banks miss out on Libya, still eye entry
Dubai, August 11, 2010
Three Gulf Arab banks have lost out in the bidding for a licence to operate in Libya, but bankers and analysts say such lenders will stay in the hunt as they look to offset slowed growth at home.
'In the UAE in particular, single-digit loan growth forces these banks to look outside their home market,' said a Dubai-based banking analyst.
'Banks in the UAE, Qatar and the Gulf in general are looking outside their home market in places like Syria and North African countries such as Libya.'
Two banks from the UAE and one from Qatar – Mashreq, Emirates NBD and Qatar Islamic Bank - had been shortlisted for a licence.
Yet only Italy's UniCredit SpA won preliminary approval to open a subsidiary in a decision announced by the Central Bank of Libya on August 9.
'Contrary to previously advised intentions, they will only be issuing one new licence,' said John Iossifidis, Mashreq's head of international banking.
The bank remains focused on its strategic expansion plans across the region, he said, echoing a statement from rival Emirates NBD.
'Emirates NBD is very committed to establishing a subsidiary bank in Libya and will continue to discuss options with the regulators in Libya,' Emirates NBD said.
Qatar Islamic Bank was not available for immediate comment.
HSBC and Standard Chartered had also been shortlisted.
Mashreq, like Emirates NBD and others, is pursuing growth in North Africa where analysts see Libya, with Africa's largest oil reserves, as an attractive long-term opportunity as it continues to open up its economy to foreign lenders.
'They need to look elsewhere. UAE demand for loans will remain subdued for a couple of years, I don't see any catalysts (for that to change),' said Tarik El Mejjad, a London-based banking analyst for Nomura, adding some lenders may have limited liquidity to expand.
The first banking analyst said one step lenders who missed out on the licence could take would be to set up offices in Libya.
'They may look into establishing a representative office which they then can turn into a branch. That is the strategy they should be looking into,' he said. – Reuters