Al Mal leaks amendments to banking acts
Purported amendments to the banking and central banking acts have leaked: Al Mal has published its take on what it says are leaks of the most important planks of the Central Bank of Egypt’s proposed amendments to the banking and central banking acts. It says there are five major surprises in the proposed amendments:
- Imposing term limits for bank executives and giving the CBE new powers to appoint representatives to bank boards of directors, while also setting new criteria for the selection of senior central bank staff to make the institution “apolitical”;
- Requiring banks to pass on 5% of their net income to a sector development fund, alongside other fees payable to the central bank, some of which are rising tenfold;
- Expanding its sway over non-bank financial services by saying it has “opened licensing and registration to new institutions” such as providers of e-payment services;
- Increasing the minimum capital requirements for CBE-compliant financial institutions, setting a minimum capital of EGP 1.5 bn for banks;
- Accepting that we are no longer in the 1980s by recognizing electronic documents and no longer requiring banks to preserve documents on paper through antiquated means like microfilm.
Banking industry rejects what it sees as the more ‘controversial’ clauses of CBE Act: The Federation of Egyptian Banks (FEB) wants to scrap the proposed term limits outlined in article 109, which they claim would see a number of current CEOs and managing directors removed. That’s the key takeaway from a rundown on the FEB’s views on the law published in Al Mal. Term limits, they argue, would infringe on the rights of bank boards of directors and general assemblies. Other banking sources telling Al Shorouk that the article simply adds another layer of review to the appointment of bank bosses, but would not impose term limits. There is no official copy of the amendments for us to verify whether the article would restore term limits for banking sector heads as was reported last week.
Bankers are also concerned that the proposed amendments would no longer require the House of Representatives to sign off the appointment of a CBE governor. Others have also objected to clauses that place the CBE under the jurisdictions of the presidency, saying that the move would make the CBE no longer an independent authority as it currently is.
Amendments to the Banking Act would make establishing an FX bureau harder, raising the minimum capital requirements for starting an FX bureau to EGP 20 mn, up from a current EGP 5 mn, according to Al Mal.