Possible compromise between CBE and FEB on CBE and banking acts?
Possible compromise between CBE and FEB on CBE and banking acts? Talks between the central bank and the Federation of Egyptian Banks (FEB) on Sunday over controversial amendments to the CBE and Banking acts appear to be heading towards a compromise on some articles, sources tell Al Borsa.
The notion that banks be required to kick 5% of their net income into an industry development fund remains controversial for rather obvious reasons, but bank MDs are willing in principle to commit to making annual contributions to the fund.
Not yet resolved: Term limits for bank managing directors. As they stand, the proposed amendments do not contain clauses that set term limits, the source said — but they do give the CBE the option to impose them in the executive regulations of the central bank act. Al Borsa reports that the FEB raised no objections to the creation of mechanisms which would allow for “the injection of new blood” into leadership positions, but we don’t expect a quick compromise on the term limits issue so long as it’s left up to the CBE’s discretion in the executive regs.
The meeting reportedly saw headway on the central bank’s power to appoint members ofa bank’s board of directors. The CBE and the FEB worked out an arrangement by which the central bank will only be allowed to sit on board meetings in “particular and special circumstances.”
Bankers raised no objection to expanding the power of the CBE governor at the expense of the CBE’s board, Al Borsa claims.
Issues that remain to be ironed out reportedly include a proposal that the CBE governor’s appointment not be subject to confirmation in the House of Representatives and the penalties set for violations of the two acts.