The Central Bank of Egypt reaffirms its commitment to banking sector reform, reports Mona El-Fiqi The Central Bank of Egypt's (CBE)Governor Farouk El-Oqda has asserted that the banking sector reform begun two years ago and which will be completed by the end of 2008, has led to clear improvements in the performance of Egypt's banking sector. El-Oqda told reporters at a press conference last week that topping the list of CBE reforms is the privatisation of the state-owned Bank of Alexandria. Last week, the CBE announced that 13 financial institutions have been short-listed as potential buyers for the bank, and that their proposals are currently being examined. El-Oqda said that the "quality presentations" submitted by 13 local, Arab and European financial associations to buy the Bank of Alexandria are "a vote of confidence in the Egyptian market". The interested buyers had submitted their initial proposals last April to the Ministry of Investment, expressing their desire to buy 75 to 80 per cent of the bank's capital. In March the government had announced that the Bank of Alexandria's majority shares would be offered for sale to a strategic investor. Five per cent of the shares would be sold to the bank's employees, while the remaining 15 to 20 per cent would be offered to public subscription. CBE Deputy Governor Tarek Emara announced that selling the majority of the bank's capital is expected to take place within the next six months. He added that following the evaluation process "the selling will take place according to international regulations and will continue in complete confidentiality." CBE officials have also affirmed that the financial organisation that will win the bank's majority stake will be placed under the supervision of the CBE so as to guarantee the rights of depositors as well as employees. One more item on the CBE's agenda is the merger of the two largest state-owned banks, the National Bank of Egypt with Banque Misr. The merger which was initiated last year aims to create a strong banking entity by the end of 2006. Meanwhile, the CBE is supporting the divestiture of public sector shares in the joint-venture banks. According to El-Oqda 94 per cent of the public sector's shares in the joint-venture banks has been divested. The remaining six per will be sold by the end of 2006. El-Oqda suggested that it is better for the public banks to make "the most" of the revenue of the sale of their shares in joint banks, so as to raise their own capital instead of keeping a small number of shares in the joint-venture banks. El-Oqda also pointed out that investments by foreign banks last year increased by a sum of LE4.2 billion. He stressed that experts must not worry about such an increase as long as these banks are well-supervised. The CBE's adopted policies have so far reduced the number of banks operating in Egypt from 57 in 2004 to 42 in 2006. The ultimate aim is to reduce the number of banks to 34 in 2007. This is also the targeted year for public sector banks to hold 48 per cent of total deposits and the private banks to hold 22 per cent. This will leave 19 per cent and 11 per cent respectively of overall deposits, to the foreign and Arab banks.
