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Cablegate: Wahda Bank Privatization Bid Won by Jordan-Based Arab Bank

Sent: Monday, February 18, 2008 9:42 PM
To: EACTTripoli(Main State Room 2530)
Subject: TRIPOLI 00000126 R UN 18-FEB-08 WAHDA BANK PRIVATIZATION BID
WON BY JORDAN-BASED ARAB BANK [7039621]

UNCLAS

VZCZCXRO0782
RR RUEHTRO
DE RUEHTRO #0126 0491942
ZNR UUUUU ZZH
R 181942Z FEB 08
FM AMEMBASSY TRIPOLI
TO RUEHC/SECSTATE WASHDC 3095
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHAM/AMEMBASSY AMMAN 0084
RUEHAS/AMEMBASSY ALGIERS 0612
RUEHRB/AMEMBASSY RABAT 0559
RUEHTU/AMEMBASSY TUNIS 0419
RUEHEG/AMEMBASSY CAIRO 1003
RUEHRO/AMEMBASSY ROME 0390
RUEHVT/AMEMBASSY VALLETTA 0275
RUEHFR/AMEMBASSY PARIS 0424
RUEHLO/AMEMBASSY LONDON 0736
RUEHTRO/AMEMBASSY TRIPOLI 3574

UNCLAS TRIPOLI 000126

SENSITIVE

DEPT FOR NEA/MAG; COMMERCE FOR NATE MASON

E.O. 12958: N/A
TAGS: ECON EFIN EINV PGOV JO LY
SUBJECT: WAHDA BANK PRIVATIZATION BID WON BY JORDAN-BASED ARAB BANK

REF: 07 TRIPOLI 885

1.(SBU) In a move that adds momentum to Libya's promising banking reform efforts, the Libyan Central Bank announced that the Jordan-based Arab Bank won the tendering process to buy 19 percent of Libya's Wahda Bank. According to press reports, Arab Bank's winning bid of 210 million euros ($310 million) easily outstripped the second highest bid of 121 million euros ($180 million) by Bahrain-based Arab Banking Corporation. Other short-listed bidders falling short of the mark were Morocco's Attijariwafa Bank, Italy's Intesa Sanpaolo. and French bank Societe Generale (Note: Societe Generale announced its withdrawal from the competition on February 12 for undisclosed reasons; Econoff subsequently learned the bank was uncomfortable with elements of the shareholding agreement. End Note). According to a fact sheet issued by Libya's Central Bank, Wahda Bank is the country's second largest commercial bank in terms of total loan portfolio, with a market share of over 20%. It is the fifth largest commercial bank in terms of total assets, with 1.7 billion euros ($2.6 billion) and 71 branches throughout the country.

2.(SBU) The shares obtained by Arab Bank were previously owned by the Libyan Economic and Social Development Fund (ESDF), which held 73 percent of Wahda before the sale. With this sale, the ESDF still has a majority stake of 54 percent, but Arab Bank will assume management control of Wahda. The remaining Wahda shares are currently held by the Libyan Central Bank (14 percent) and a collection of Libyan investors and companies (13 percent). Under the terms of its purchase, Arab Bank will have the right to eventually raise its stake in Wahda Bank to 51 percent over the next three to five years.

3.(SBU) Comment: This sale marks the second successful privatization of a Libyan commercial bank, following a similar deal struck with France's BNP Paribas in its purchase of a 19 percent stake in Sahara Bank in September 2007 (reftel). The Central Bank continues to draw on foreign expertise for pushing through its banking reform strategy, with McKinsey and Company (strategic advisor), Rothschild (financial advisor), Baker and McKenzie (legal) and KPMG (accountants) all playing substantial roles. With the privatizations of Wahda and Sahara well in hand, the next target for the Central Bank will be solidifying its December 2007 merger of the state-owned Jamahiriya and Umma Banks into a single entity, the Libyan Bank. End comment.
STEVENS 0 02/18/2008

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