Officials within the banking sector refused to provide new lines of credit to industrial companies for the purpose of collectively paying back loan instalments. Similar lines of credit were previously granted to the tourist sector, with industrial companies requesting extensions on loan instalments in order to cope with new difficulties faced as a result of the country's fuel crisis. Officials stated that the two sectors were very different and that one could not compare the two. Many industrial companies and business organisations have already requested bank aid in order to help address the country's fuel resource crisis which has worsened as a result of recent political turmoil. The Egyptian Manufacturer's Association held a meeting with representatives from Egypt's Central Bank, in addition to a number of private banks, in order to seek ways to place industrial companies on an even keel with those operating in Egypt's tourist sector, asking that 6 month extensions be granted for the repayment of loan instalments. Hamda Azzam, member of the Board of Directors for the Industrial Development and Worker's Bank of Egypt, stated that a number of companies have already filed requests to postpone payment on loan instalments as a result of the country's current political crisis. Ismail Hassan, Chairman of the Misr Iran Development Bank, added that many banks had begun studying ways to postpone payment on loan instalments for clients who were unable to meet their payment dates. He doubted however that such extensions would be granted, considering the stark contrast that exists between Egypt's industrial and tourist sectors. He stated that banks generally do not authorise the postponement of loan instalments and the freezing of interest rates except in cases where it is proven that clients are incapable of repayment, so as to avoid losing deposited funds. He added however that banks have no problem aiding clients whose need for aid could be proven and confirmed. Egyptian industry receives more bank funding than any other economic sector, owning upwards of 1/3 of all bank loans currently on the market. Industrial companies currently owe EGP 185bn to Egypt's banking sector, representing 34% of all existing bank loans on the market, which total EGP 541bn. Azzam stated that the Industrial Development and Worker's Bank possessed some flexibility with regards to clients who have suffered as a result of recent political turmoil, saying that each case was being studied and analyzed with intense scrutiny. He added that steps would be taken to help keep clients afloat during hard times. He stated that some requests for postponement of repayment on loan instalments had already been reviewed and granted, particularly those coming from businesses and organizations who requested such extensions before the outbreak of Egypt's most recent political turmoil. He stated that the total amount of loans provided to private sector industrial companies was EGP 157bn, compared to EGP 28bn for government owned public sector industrial companies. The prospect of widespread factory closures within the country's industrial sector would deal a heavy blow to the quality of Egyptian bank assets, which have undergone repeated downgrades by rating agencies in the last two and a half years. This will require that new allocations are put forth at higher rates, a fact which will put pressure on bank profits. Such rates reached more than EGP 7bn in the period from November 2012 to May 2013. An official from within Egypt's Central Bank dismissed the possibility that 6 month extensions could be granted for the repayment of loan instalments, similar to what happened within the country's tourist sector. He stated however that the Central Bank always asks of Egypt's smaller banks to be flexible with their clients during times of crisis, and to provide them with appropriate aid after confirming the seriousness of client requests. He stated that private banks, in cooperation with Egypt's Central Bank, would not hesitate to provide aid to clients if the need for such aid could be confirmed, in order to avoid slowing down the country's industrial production rates. Translated from Al Borsa newspaper http://goo.gl/jQfeag
