Italy’s Intesa Sanpaolo could soon own all of Alexbank: Italy’s Intesa Sanpaolo is in advanced talks with the government to acquire the remaining 20% of the Bank of Alexandria (Alexbank) it doesn’t own, a government source with first-hand knowledge of the potential sale told Enterprise yesterday. The Italian lender has been the majority shareholder of Alexbank since 2006 when it purchased 80% of its shares from the government in a major USD 1.6 bn acquisition.

The transaction would make it easier for the state to exit its stakes in three other banks that it has earmarked for privatization: Banque du Caire (BdC), Arab African International Bank (AAIB), and United Bank are on the list of 32 names the state has identified as near-term priorities for privatization. BdC has been in the government’s IPO plans for years while United Bank has been rumored to be subject to a takeover bid by the Saudi wealth fund and Saudi financial institutions. AAIB, a well-respected full-service bank with a leading corporate franchise, was run for years by Central Bank of Egypt Governor Hassan Abdalla before he entered government service.

A potential sale was telegraphed by the EGX last month: The lender was absent from the list of 32 state-owned companies recently put forward by the government for privatization though it was named by the EGX in January as being in the pipeline of forthcoming offerings.

There’s just one hurdle: An Egyptian court will need to rule on a long-standing legal challenge against the original sale to Intesa before a takeover can go through, two sources told Reuters yesterday. The Egyptian Center for Transparency mounted a legal challenge against the sale over a decade ago, claiming that the government had agreed to sell the stake at a price below the bank’s market value.

The courts cleared a legal barrier to the sale just last month then the Supreme Constitutional Court (SCC) voted to uphold a law passed in 2014 that prohibits third-party lawsuits against contracts between the state and investors. The law was originally conceived to prevent outside legal challenges to the government’s privatization agenda.

A decision before the end of the week? The SCC’s ruling will now allow decisions to be made on a number of outstanding cases, including the sale of Alexbank to Intesa. One of Reuters’ sources said that the court could make a decision as early as 25 February while a separate legal source said that the challenge to the sale would likely now be dismissed.

By the numbers: Alexbank’s bottomline grew 21% y-o-y to EGP 834.5 mn in 3Q 2022, supported by rising net interest income and higher revenues from fees and commission, according to the bank’s most recent financial statement (pdf).

REMEMBER- The privatization push is part of the country’s new state ownership policy, which outlines how the government intends to more than double the private sector’s role in the economy to 65% and attract USD 40 bn in private investment by 2026. The government says it will reduce its involvement in a number of sectors via public share offerings, stake sales to strategic investors, and expanding public-private partnerships.