EFG in merger talks with Lebanese lender

Lebanon's Bank Audi said on Tuesday it was in talks with Egypt's EFG-Hermes investment bank over a possible merger.

Shares in Bank Audi, one of Lebanon's two largest banks, rose 8.9% to $87.20 on Monday, driven by rumours of a merger but the bank's London-listed GDR was trading 3.38% lower on Tuesday.

Bank Audi said if the merger succeeded, it would "generate significant commercial and financial synergies" but emphasised that talks were still at a preliminary stage.

Shares in EFG, Egypt's largest investment bank, rose 0.77% to 57.75 Egyptian pounds ($10.52) by 0925 GMT. EFG, which owns a 23% stake in Audi, confirmed the talks.

"This will definitely give a push to Bank Audi," said Maya Ali Hassan, senior investment adviser at Arab Finance Corporation, in reference to a possible deal.

"The market was up yesterday because [of] the rumour... people act more on rumour," Hassan said, explaining Audi's poor performance on Tuesday. "Today, the news is out and has already had its effect... Lebanese stocks are all down today."

Lebanon's BLOM stock index was down 0.22%.

Bank Audi, which has a presence in France, Switzerland, Syria, Jordan, Sudan, Saudi Arabia, Qatar and Abu Dhabi, said any merger deal would be conditional on obtaining necessary shareholder and regulatory approval, including the central bank's consent.

EFG-Hermes operates in Egypt, Saudi Arabia and the UAE.

Audi posted a 22.5% increase in its 2007 net profit to $201 million. EFG posted an 82.5% rise in its 2007 net profit to $233 million. (Reuters)

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