A number of experts in the banking sector affirmed that specialized banks will face several challenges to apply the standards of "Basel 2", such as the nonperforming debts crisis, provisions' deficit as well as the lack of modern technology and a strong database. Experts pointed out that specialized banks, especially the Egyptian Arab Land bank (EALB) and Principal Bank for Development and Agricultural Credit (PBDAC), may apply the initial stages of “Basel 2", while giving notice to other banks which could not apply the Basel requirements at this time. Banking experts agreed that the application of these standards will help Egyptian banks to strengthen their financial and management position, helping them to expand abroad, issuing letters of credits (LC) and letters of guarantee (LG), assuring that the application of those standards require banks to build modern IT systems and to support their financial position as well as implementing strong internal control. Mohammed Nabegh, head of operational risks at Ahli United Bank, said specialized banks can apply standards of "Basel 2" successfully despite debts and provisions' crisis, explaining that "Basel 2" has several stages and is likely to be limited on its initial stages in Egypt. He explained that applying the standards of "Basel 2" will greatly increase business's efficiency due to better risk management, which will be performed according to more professional methods as well as liquidity management and the development of better credit structures depending on modern technology. An official source at the Egyptian central bank declared that Basel 2 standards are not obligatory for banks, explaining that in the case of the bank's inability to comply, it will have another deadline to adapt. Source expected that many specialized banks will not be able to apply those standards due to high losses, such as the Egyptian Arab Land Bank, affirming that the application of Basel 2 standards will help banks to implement best banking and international regulatory practices.
