Cedrus Bank is considering local expansion and a major acquisition of a lender to increase its balance sheet and become a major player in the market, its CEO said.
“We plan to expand our operations and balance sheets organically and non-organically. Organically, we will focus on increasing the number of branches in Lebanon, introduce new products and make more investments in the IT sector. Non-organically, we are looking into acquiring at least a medium-size bank with large balance sheets and many branches in the country,” Fadi Assali told The Daily Star in an exclusive interview.
But he emphasized that Cedrus is not currently negotiating with any bank although it’s keeping a close eye on any good prospect in the future.
In February 2015, Cedrus Invest Bank acquired the commercial and retail operations of Standard Chartered in Lebanon.
Cedrus Invest is a leading investment company with total equity of around $110 million.
This is the first time Cedrus Invest has ventured into commercial banking in Lebanon with the full support of the shareholders of the firm.
Assali stressed that the bank did not yet make a profit this year due to the fact that Standard Chartered in Lebanon incurred losses in 2014.
But the young CEO seemed confident about the future of the bank despite the challenges that lie ahead.
At present, the total assets of Cedrus are $208 million, while customer deposits stand around $126 million, and this amount is still considered very small compared to major banks in Lebanon.
The bank has managed to double its balance sheets after acquiring Standard Chartered and increased its customer base.
“We have managed to increase deposits and assets in a short period of time. But we did not see any profit yet. We hope to break even in the first quarter of 2017 and from there will start reporting profits hopefully,” Assali explained.
Cedrus Bank still has its headquarters in Dbayeh with two branches in Verdun and Ashrafieh.
The bank intends to open two to three more branches this year.
The management is also looking into relocating its headquarters from Dbayeh to Beirut to remain close to the business center.
Assali insisted that branches alone will not bring in new customers.
“We are focusing on improving our ATM, online and IT operations,” he added.
Cedrus introduced new wider range of credit and debit cards as well as a large range of housing loans which did not exist when Standard Chartered was operating in Lebanon.
Assali acknowledged that an acquisition of a bank with balance sheets of $700 million at least is one of the shortest ways to bolster the assets of Cedrus as well as access more branches in different locations of the country.
“It’s true we have a capital of $15 million only but Cedrus Invest has equity of $110 million and we can increase this capital twice or more if we see potential to buy a medium-size bank,” he added.
Assali argued that there is no point acquiring a bank with only $200 million or $300 million balance sheets because Cedrus will be able to reach this target in few years organically.
He added that the target of the bank is reaching a capital of $50 million from the current $15 million.
Assali had no remorse buying the commercial and retail business of Standard Chartered in Lebanon despite the challenges lying ahead.
“We are very happy with the decision for different reasons. First of all it was an entry for us into the banking area. Second the platform we inherited, despite the missing par, has lot of good things such as a well trained staff and a good retail part,” he added.
He reiterated that the shareholders in Cedrus Invest are committed to the banking operations in Lebanon and have all the means to expand this type of operations in the near future.
By Osama Habib
