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Attijariwafa eyes Barclays Egypt but faces competition


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Attijariwafa eyes Barclays Egypt but faces competition

Withbids for 's Egypt businessdue at the end of August, Morocco's Attijariwafa Bank SA will attempt to continue an expansionacross Africa it started in 2005, with an Egyptian footprint that has eluded it.

However,the largest Moroccan bank will again face competition from the United ArabEmirates' biggest by assets, with Emirates NBD Bank PJSC seeking to expand the Egyptianoperations that it acquired from BNP Paribas SA in 2013, ahead of Attijariwafa.

Theprize in question, Barclays BankEgypt (SAE), is valued at between $400 million and $500 million andoperates 56 branches across Egypt, with 1,500 employees and a focus on retailbanking. As at the end of 2015, it had a core Tier 1 ratio of 27% and a ratioof problem loans to total loans of 5.5%. Its assets totaled $2.58 billion, withnet customer loans of $885.5 million. Total equity was $435.7 million.

AnEgyptian footprint would add to 24 countries where Attijariwafa, which had$41.48 billion in assets at the end of 2015, now boasts a presence.

"Inmost of the markets where they are present, they are in the top five in marketshare," said Elena Sanchez-Cabezudo, managing director of financialresearch at EFG Hermes in Dubai, in an interview. Some 27% of its net bankingincome comes from outside Morocco, general manager Ismail Douri told Reuters.

ThisAfrica strategy is Attijariwafa's attempt to free itself from overreliance onthe performance of the Moroccan economy. The country's banking sector has seendemand for loans slow alongside a slowdown of imports, partly financed by loans.

Attijariwafasaw its loans and deposits return to growth in 2015, by 2% and 6%, after a dipin 2014, according to its annual results. The bank's domestic base is"holding its own surprisingly if you look at the results," said KatoMukuru, head of equity research at Exotix Partners in Dubai, in an interview. Buthe added that "it's clearly a difficult business to characterize as agrowth story."

MohammedEl Kettani, CEO since 2007, says the first phase of the expansion plan, focusedon West and Central Africa, is over. The current stage is targeting anglophoneAfrica, he told Jeune Afrique. Thisincludes Nigeria and the elusive Egypt, Douiri told Reuters, but staying awayfrom the highly competitive South African market — and consequently, BarclaysAfrica.

"Thisexpansion strategy has its drawbacks," Aymen Soufi, a financial analyst atAlphaMena in Tunis, wrote in a March research note. Attijariwafa has seen adeterioration in its asset quality since 2012, and has a greater risk exposurefrom the fragility of African markets.

Thoughsmall, Barclays Egypt would give Attijariwafa a footprint in one of Africa'slargest banking markets. Egypt has a population of about 90 million, and a farsmaller loan penetration than Morocco.

BothAttijariwafa and Emirates NBD have appointed investment bank advisers,according to sources speaking to Reuters — UBS and Perella Weinberg Partners,respectively. Former Barclays CEO Bob Diamond's may place a bid also,in an attempt to acquire all of Barclays' African stakes. Egyptian domesticbanks may enter the fray as well. By contrast, , UAE's largestbank by market capitalization, denied reports in March it would be bidding.

"Iunderstand it's going to be competitive — a few GCC banks are ready to pay 1.5xto 1.6x book," said Sanchez-Cabezudo.  

Ifhistory repeats itself and Attijariwafa is pipped by a higher offer from EmiratesNBD, there are other roads into Egypt.

"IfI was Attijariwafa, I would rather look at Crédit Agricole['s Egypt operations]— a much bigger business, and we all know it's for sale, just notpublicly," said Mukuru, who thinks an Egyptian bank such as is likelier to acquire Barclays Egypt.

Inselling up its Egyptian stake, Barclays is following in the footsteps of bothBNP Paribas and Société Générale, which sold their Egyptian operationsfollowing Egypt's 2011 revolution, which heralded a decline in tourism andforeign investment.

Attijariwafa,headquartered in Casablanca and 48%-owned by the Moroccan monarch's SNI holdingcompany, was formed in a 2004 merger when the Kettani family sold its privatebank Wafabank to the Banque Commerciale du Maroc, owned by the king's holdingcompany.