ABA Corporate Member, Alexander & Partner, is pleased to present an update on recent financial regulatory initiatives in the GCC. This update covers the period from April to June 2019 and contains information on initiatives in Bahrain, Saudi Arabia and the UAE. This Regulatory Update will be a regular feature on our website, with new updates being published approximately every...
ABA visit to banks in Cairo
George Kanaan and Andrew Cunningham visited Cairo from 18-21 March to strengthen the Arab Bankers Association's links with the Egyptian banking sector.
Only National Bank of Egypt is present in London so we decided to go to Cairo.
The people we spoke to were optimistic about the Egyptian economy and the opportunities that will arise for the banking sector, while being realistic about the underlying challenges of over-population that the country faces.
Specifically, the bankers we spoke to noted three things:
- the development of the giant offshore Zor gas field is making Egypt almost self-sufficent in gas and so is reducing the amount of foreign exchange that Egypt needs to spend on energy
- tourism receipts are increasing
- revenues from the Suez Canal are increasing.
As one banker put it, "Revenues from these sources are 'our money' - they are revenues based on our own resources, not donations or loans from external parties."
Bankers are hoping that more liquidity in the economy, combined with several years of stable political conditions will entice the business community to start developing new projects, which in turn will provide the banks with opportunities to lend. Bankers are also hoping that the improved economic environment will lead to a reduction in interest rates, which in turn would support greater activity in the business community.
The three-year Extended Fund Facility with the IMF will end in November this year. So far, Egypt has fulfilled all the conditions under the programme and has received $10mn in finance from the Fund. Everyone expects the final $2bn to be disbursed without difficulty in November. The people we spoke to expected that Egypt will try to retain some form of relationship with the Fund after November, but that it will want to avoid any 'conditionality', whereby the IMF offers money but imposes conditions - typically a reduction in government subsidies or other measures to improve the national budget or the balance of payments.
The term of the Governor of the Central Bank of Egypt, Tarek Amer, will expire in November and people are wondering whether it will be renewed, or whether a new Governor will be appointed.
During our meeting with the British Ambassador, we outlined the role that the ABA plays in London, both representing Arab banks and advocating for London as a financial centre. We hope that, as a result of our visit, the Association will have more frequent contact with senior Egyptian bankers when they are passing through London. (And in fact, as a result of an Embassy introduction, one such meeting was arranged only days after we left Cairo.)
One of the big issues for the banking community and embassies at the moment is how to respond to the building of the new capital city, to the east of Cairo. All banks and embassies have been told that they must move there, but it was clear to us that no one wants to, although senior bankers are happy to tranfer their support/back-office operations.
What makes things awkward is that many banks have recently completed large new office buildings in New Cairo, which is also on the east of the current city. The foreign banks now have their head offices there, while many of the local banks have substantial operations.
Tisa'een Street, which is where these new buidlings are, comprises a long line of modern bank buildings. The journey from the downtown Cairo to Tisa'een Street took us 50 minutes, after leaving downtown around 8am, and it took us about the same time to get back later in the morning.
The new capital is about 45 minutes further east, along a good new road.
This was a very successful visit for the ABA and it achieved its objective to strengthen our ties with leading Egyptian banks. We hope to conduct further visits such a these, both back in Egypt and in other countries in due course.
Here is a list of people we met in Cairo:
Ghada el-Bialy, CEO Treasury,Froeign and International Financial Services, National Bank of Egypt
Akef el-Maghrabi, Vice Chairman, Banque Misr
Hussein Abaza, CEO, Commercial International Bank
Sherif Elwy, Managing Director, Arab African International Bank
Mervat Soltan, Chairperson, Export Development Bank of Egypt
Sir Geoffrey Adams, British Ambassador to Egypt
Nicolas Bremer, Attorney, Alexander and Partner law firm
Hugh Miles, Owner of 'Arab Digest'
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