Press Release

Bank of Beirut s.a.l announces merger with Beirut Riyad Bank s.a.l

Today Bank of Beirut s.a.l. is pleased to announce that it is to merge with Beirut Riyad Bank s.a.l., to form the sixth largest Bank in the Lebanon. The new Bank will have:

• Total assets of approximately LBP 4,600 billion.

• A deposit base of approximately LBP 3,600 billion.

• A loan portfolio of approximately LBP 1,100 billion.

• Loans to deposit ratio of 20% in LBP and 35% in foreign currency.

• Shareholders’ equity of approximately LBP 190 billion prior to the anticipated capital increase.

• Liquidity ratio of 70%.

• An increase in the number of branches from 32 to 43.

• No dilution to earnings in 2002 and earnings enhancing thereafter.

Under the terms of the merger agreement, Bank of Beirut s.a.l. will acquire the existing shares of Beirut Riyad Bank s.a.l. The Central Bank will assist Bank of Beirut s.a.l. by providing adequate financing to support the non-performing assets in the portfolio and, therefore, the performance of the Bank is expected to continue progressively.

The two Banks’ activities are complementary to each other and their combination will strengthen the position of Bank of Beirut s.a.l., both in the Lebanon and the region. The branch network will be increased from 32 to 43 locations and the number of depositors will rise by approximately 40%. There is minimal overlap in the two banks’ customer base.

The regional activities will be enhanced through the traditional strengths of Beirut Riyad Bank s.a.l. in selected African markets and Saudi Arabia. This, together with our existing strategic shareholder, Emirates Bank International pjsc, will assist Bank of Beirut s.a.l. in achieving further penetration of banking markets throughout the Arab world.

Integration of the two Banks is now being planned and it is expected that significant cost and revenue synergies can be realized over the next 18 months. Within the plan, a major objective will be to optimize the profitability of the branch network. 

The combined Bank will have a strong balance sheet, which will support the future growth and profitability of the business. It is expected that the combination of the two banks will result in enhanced business efficiency and effectiveness. There will be no reduction in earnings in the current financial year as a result of the merger and it is expected that earnings will be enhanced thereafter.

At a General Assembly of the Shareholders of Bank of Beirut s.a.l. held on May 30th, 2002, it was agreed to increase the paid-up equity capital of the Bank by USD 5 million from the reinvestment of dividends. In addition, it is intended that at least USD 10.5 million will be raised by the subscription of new shares by a number of the current shareholders of Beirut Riyad Bank s.a.l., notably the El Khalil and Sharabatly groups.