Jordan’s Capital Bank agrees to buy Bank Audi assets in Jordan and Iraq

The deal will increase the Amman-based lender’s assets to around 3.6bn Jordanian dinars

A worker cleans the logo of Bank Audi in Beirut. The lender is selling its assets in Jordan and Iraq to Capital Bank Group. Reuters

Jordan’s Capital Bank Group completed a deal with Bank Audi of Lebanon to buy its businesses in Jordan and Iraq.

Amman-based Capital Bank will acquire both the assets and liabilities of Bank Audi in both countries, it said in a statement to the Amman stock exchange, where its shares trade. National Bank of Iraq, a subsidiary of Capital Bank, will complete the transaction in Iraq.

“This agreement is in line with Capital Bank’s expansion strategies regionally and locally, ultimately strengthening its competitive position,” Bassem Khalil Al-Salem, chairman of Capital Bank Group, said. “The move will also enhance the steadfastness of Capital Bank Group’s financial indicators, allowing it to continue providing ... banking services to corporate and individual customers.”

Bank Audi has 14 branches in Jordan and five in Iraq. The lenders did not disclose the value of the transaction, which has already been approved by the respective central banks in Jordan and Iraq.

However, Capital Bank said the assets being acquired within each respective market had values of 506 million Jordanian dinars ($713.7m) and 275 billion Iraqi dinars ($231.3m). The acquisitions will increase the value of Capital Bank's assets to 3.6bn Jordanian dinars and its shareholders’ equity to 400m dinars.

Lebanon is undergoing its worst financial and economic crisis since the end of the country's civil war, which has led to many of its banks enter into negotiations to sell off assets to raise capital. Earlier this month, Blom Bank said it has begun exclusive talks with Bahrain's Arab Banking Corporation (Bank ABC) to potentially sell its Egyptian subsidiary, Blom Bank Egypt.

First Abu Dhabi Bank also said in October it had recommenced talks with Bank Audi to potentially acquire its Egyptian subsidiary. Negotiations were suspended earlier in the year following the onset of the coronavirus.

Lebanon's economy has been on a downward spiral after defaulting on about $31 billion of eurobonds in March. Its economy is forecast to shrink as much as 25 per cent this year, according to the IMF while the World Bank forecasts a 19.2 per cent contraction.

“These transactions further reinforce our bank’s role in facing the considerable challenges Lebanon has been exposed to for over a year now,” Samir Hanna, chairman and chief executive of Bank Audi, said.

Dawood Al Ghoul, Capital Bank’s chief executive, said it intends to retain all of Bank Audi's client accounts and its staff in both markets.

“We will honour all commitments towards clients that were contracted by Bank Audi's units in Iraq and Jordan”, he said.