According to the terms of an agreement that will be officially signed on July 25 with the Government's investment holding company, BNP Paribas will acquire 19% of the bank's capital and will immediately take over its operational control. The amount of this transaction totals €145 million, representing 3.6 times its current book value. Delivery of the shares will occur in mid-September following the completion of the formalities required by local stock exchange regulations. Terms of this takeover of operational control include an option to purchase additional shares for up to 51% of the capital over the next 3 to 5 years. The conditions for the purchase of the additional 32% have already been established based on the price paid for the initial 19%, increased by a fixed interest rate.
Sahara Bank is a full service bank with 1,500 employees and a market share of 17% in loans and 22% in deposits. Its clients, who are served by a network of 48 branches throughout the country, include large state enterprises, as well as private companies, both Libyan and foreign owned, and over 300,000 individual and professional customers. This significant market position makes Sahara Bank an attractive vehicle for entering the Libyan banking market.
This privatization transaction is part of the Central Bank of Libya's restructuring program for the Libyan banking industry. Implementation of this program is already underway with measures including the liberalization of regulations on banking activities, the modernization of payment systems, and the creation of a credit bureau. These reforms should spur rapid development of the Libyan financial sector, bringing it to the level of banking systems in neighboring countries.
The country's economic outlook is favorable in the medium term. In its most recent review, the IMF estimated that growth would exceed 6.5% over the next 5 years. This growth is primarily based on Libyan authorities' economic reform policies (to be financed by oil revenues) that are intended to stimulate domestic demand, particularly in the services, construction and infrastructure sectors. In 2006, growth in the non oil sector exceeded growth in the oil sector. In addition, human development indicators are already the highest in the region, according to the 2005 report of the United Nations Development Program.
With this acquisition, the BNP Paribas Group expects to realize many synergies, particularly in the area of international trade finance. The Group now has an unrivaled presence in the Mediterranean Basin, one of its priority growth areas. In addition to its two domestic markets, France and Italy, BNP Paribas also has strong positions in Morocco, Algeria, Tunisia, Egypt and Turkey.
About BNP Paribas
BNP Paribas (www.bnpparibas.com) is a European leader in banking and financial services, and ranks among the world's top 15 banks by market capitalization. It has 150 000 employees, almost 120 000 of whom are based in Europe. The group occupies leading positions in three significant fields of activity: Corporate and Investment Banking, Asset Management & Services and Retail Banking. It is present in 85 countries and has a strong presence in all the key financial centres. Present throughout Europe, in all its business lines, France and Italy are its two domestic markets in retail banking. BNP Paribas enjoys a significant and growing presence in the United States and leading positions in Asia and in emerging markets.