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EGYPT |
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Finance & banking system |
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A new banking law (law n°88-2003 of 15 June 2003) has unified all Egyptian banking regulations. It was enacted in accordance with the international prudential standards of the Basle II agreements and contributes to strengthening the Egyptian banking structure by improving prudential ratios and governance rules. |
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Egypt |
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Egypt |
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How to invest in Egypt? |
The new law certainly catalysed mergers and acquisitions given that it forced banks to meet new minimum capital requirements by July 2005. Moreover, the new law abolished the distinction between commercial, business, and specialised banks. Initial capital is now EGP 500 million minimum for a bank and the capital adequacy ratio is at least 10 percent. For foreign bank branches, the minimum capital requirement is US$ 50 million or equivalent in a convertible currency.
Also under way are a restructuring plan for liabilities (non recoverable loans) and bank recapitalisation, with the financial and technical assistance of international donors. Another recent modernisation effort is the introduction of free flotation of the national currency vis-à-vis the dollar.
The Central Bank of Egypt (CBE) is responsible for supervision, control, and regulation of the banking sector and for issuing licences. The country’s banking network is relatively dense and currently counts 53 banks: 27 commercial banks (of which three are State owned) with 1375 branches, 23 investment banks (including 12 foreign branch banks) and 3 specialised banks.
The banking system (excluding the CBE) is dominated by the three state-owned commercial banks, the Misr Bank, the National Bank of Egypt (NBE), the Bank of Cairo, plus the recently privatised Bank of Alexandria. These four banks accounted for some 60 percent of banking assets in 2003.
Foreign banks can open representational offices in Egypt, with activity limited to market analysis and identification of investment possibilities. There are 26 representational offices of foreign banks currently operating in Egypt. Subsidiary companies of foreign banks are mainly Arab and European (BARCLAYS, HSBC, Credit Lyonnais, BNP and GP). And the Natexis Bank has a representational office. |
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Cairo and Alexandria Stock Exchange (CASE) |
The Cairo and Alexandria Stock Exchange (CASE) is Egypt's major stock market, one of 2005’s top performers. After stabilisation of the sector, more than 744 companies were listed in 2005 (vs. 1110 in 2001) but with higher market capitalisation (EGP 235 billion vs. 11.3 billion in 2001), driven by privatisation of a number of banks, the sale of public shares in some State owned companies, such as Sidpec (petrochemicals) and Amoc, Egypt Telecom (20 percent of shares) and the oil company MIDOR, which led the growth of the Case 30 index. Foreign holdings increased from 16 percent in 2001 to 27.5 percent in 2004 and 30 percent in 2005. |
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