THE PEOPLE'S Assembly Economic Committee met yesterday to discuss the recent government decision to sell 80 per cent of the shares of the public sector Banque du Caire. Many National Democratic Party, opposition and independent deputies described the decision as a very dangerous step aimed at enabling foreigners to take hold of the Egyptian banking system. Mustafa El-Said, chairman of the assembly's Economic Committee, said parliament must be informed of all the procedures leading to the actual sale of the bank "because parliament's role is supervising public funds and ensuring that the sale of public sector banks do not affect spending on development projects and that foreigners do not control the banking system." This came a couple of days after the Central Bank of Egypt hosted a press conference to reveal the reasons behind the decision to sell. CBE's Governor Farouk El-Okda said the government opted to selling the bank instead of merging it with Banque Misr after an assessment revealed that the merger would cost LE20 billion, the sum needed to cover BDC's non-performing loans provision and bad debts of public companies. El-Okda expected that the sale of the bank will generate from LE12 billion to LE14 billion in proceeds which is even higher than the proceeds from the sale of the Bank of Alexandria last year. El-Okda based this optimistic expectation on the six per cent market share of the BDC, in addition to its nationwide network of 200 branches. LE10 billion of the sales receipts will be used to cover the non- performing loans provision; part of the balance will be directed to repay the public sector companies' debt to the Bank of Alexandria and the National Bank of Egypt. According to El-Okda this will clear the two banks' loan portfolio before the end of the current fiscal year in June and will help in dealing with the distortions in the finances of the public enterprise companies which owe the two banks LE6 billion. El-Okda insisted that even if the bank was sold to foreigners or Arabs the ownership structure in the banking sector will still be in favour of Egyptians. Foreigners have a market share of 18 per cent compared to the Arabs' 11 per cent. The balance is owned by Egyptian banks. The government has invited financial institutions to submit offers to be the sale advisor. When chosen, the advisor has to prepare an information report about the bank, the banking sector and the Egyptian economy as a whole, to be presented to interested buyers. Meanwhile, a long list of international, regional and local banks expressed interest in the bank. The list includes the Arab Bank, the National Bank of Kuwait and the British Standard and Chartered and HSBC. It is also rumoured that two local commercial banks are considering merging together to bid for BDC.
