BEIRUT: Bank Audi Group is considering moving its headquarters office to the United Arab Emirates and has been in lengthy negotiations with regulatory authorities there, a senior banking source has told Annahar.
Bank Audi is said to be looking at either Dubai or the less flashy Abu Dhabi as potentials for a new HQ, with Abu Dhabi said to be the odds-on favorite.
The potential move comes as Bank Audi has been strategically expanding abroad but finding more rapid expansion is slowed because of Lebanon's low sovereign debt rating, and other negative factors pertaining to Lebanon, which a change of the main office would serve to dramatically rebrand Audi as a global entity.
Over half of Bank Audi's financial activity is outside of Lebanon and analysts note that along with the negative impression of Lebanon's sovereign ratings, the mere fact of being in Lebanon is a negative to many investors and other in the GCC region.
Talks with Abu Dhabi have also included a potential 25 percent capital participation in the bank.
Bank Audi released a statement responding to media reports saying that "Bank Audi wishes to clarify the following: No decision has been made ....regarding such a matter; if and when a decision is made, in keeping with its disclosure policy and applicable legal requirements, Bank Audi will make an announcement. Until that time, any discussion is pure speculation."
Short of actually refuting media report, the bank added, "Bank Audi regularly considers strategic options to enhance shareholders' value and benefit its other constituencies, especially its clients."
According to Bank Audi's Q1 financial report, the contribution from outside of Lebanon accounted for 54 percent of net earnings for Q1 2016 compared 52 percent for this same period the year before.
In total for the quarter, the bank's consolidated net earnings after provisions and taxes were $110 million for the first quarter of 2016, a 10 percent increase compared to the same period last year. On its balance sheet, Bank Audi has $41 billion in total assets.
The change of HQ would require the move of the entire senior management staff of Bank Audi. However, Audi's large business unit remaining in Lebanon would be subject to the supervisory regulations of the Banque du Liban.
A senior staffer at the Banque du Liban said the Central Bank had received no paper work on this matter, nor was there any information on such a move known among staff. The staffer asked to remain anonymous as he was not authorized to speak on behalf of the central bank.
Looking at the logic of such a move, he added Bank Audi would free itself from a variety of restraints by going offshore, not only Lebanon's low sovereign ratings, but also other negative perceptions such as image problem caused by the Hezbollah group to the financial community of Lebanon.
All these factors, including the image of Lebanon's stagnant economy, political deadlock, trash-strewn streets, and constant power outages, work in a negative fashion to limit not only Bank Audi's growth abroad but also how it is viewed by the global banking community -- this pertains to all of the banking sector and much of the business sector, another senior banker noted.
Lebanon's sovereign ratings are as follows: Moody's, long-term currency, "B2", outlook, "Negative"; Fitch's, "B", outlook "Negative"; Standard &Poor's, "B-", outlook, "Negative"; and lastly Capital Intelligence, "B", outlook, "Negative." All these firms cite variations of the same reasons for a negative outlook, noting Lebanon's prevailing geopolitical and political risk, which weigh negatively upon any positive economic activity and increase overall the country' vulnerabilities.
In related business on Bank Audi's expansion abroad, the bank announced at the end of April the opening of up to 10 branches in Turkey, adding to its 50 branches already there, with the expansion effected through its fully owned Turkish subsidiary Odeabank.
Bank Audi has also expanded into Egypt, with both countries representing faster growth opportunities for the bank based on these respective nation's higher GDP growth rate.
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