Bank executive says Egyptian financial sector remains attractive despite challenges CAIRO: The entrance of Lebanon s BLOM Bank into the Egyptian market at the end of 2005 could not have been more discreet. But, looking back, perhaps it was for the best. While Egypt was preparing for its first presidential elections and dealing with the ongoing controversies of the government s plans for amending the constitution, privatization and implementation of economic reforms, the Lebanese bank saw an opportunity for expansion not to be missed in an inconspicuous, medium-sized bank offered for sale. In an estimated LE 580 million deal, BLOM acquired Misr-Romania Bank s (MRB) eight Egyptian branches. The bank also gained access to the Romanian market with another five branches in Romania. Former ownership of MRB was made up of a group of Egyptian banks, lead by Banque Misr, with 51 percent and Romanian banks with 49 percent. Despite the distractions at the time, newly appointed Managing Director Alaa Samaha says MRB presented the perfect opportunity to enter a large, still relatively untapped market. BLOM received permission from the Central Bank of Egypt to conduct due diligence in August and the deal was finalized in December. There s no doubt Egypt is one of the most attractive markets in the region, says Samaha. With 74 million people and less than 10 percent with bank accounts, there is still much room for growth. Since the acquisition, BLOM has announced the construction of new branches in Maadi, Sharm El-Sheikh and Mansoura. Much like other banks have realized, the keys to tapping into the Egyptian market now are focusing on small and medium businesses, which have traditionally had little or no access to credit, and improving customer service. The consumer can have the appetite to deal with the bank if the bank can reach the consumer and provide him with good service, says Samaha. We know 42 percent of the population is under the age of 18, so there s a whole new generation that s going to grow up with ATM machines and with knowledge of how banks should work to serve them. That is what makes this market promising. BLOM is the largest bank in Lebanon with nearly $12 billion in global assets spread among its subsidiaries in nine countries in the Middle East and Europe. BLOM Egypt was established with LE 500 million in paid capital and now commands a deposit base exceeding LE 3.4 billion, up 10 percent since the beginning of the year, according to its Q2 results. Moving forward, Samaha says BLOM s success, as well of other banks in energizing the Egyptian financial sector depends largely on further reforms by the government to increase transparency. In the end, it is all about transparency, says Samaha. The more transparent the system is, the more trust people can put into it. Transparency, he says, should also create a more investor-friendly climate which should lead to creating a more consumer-friendly climate. We need to find out why we are ranked among the least welcoming countries for business and make a goal of achieving a high ranking in next year s report, he says referring to a World Bank report released last week ranking Egypt No. 165 out of 175 countries on ease of doing business. Then we need to become a more customer-oriented market, he adds. We need to serve investors better, foreign customers better, but even more importantly, serve Egyptians better.
