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Wednesday, 15 November 2017

EBRD goes on a spending spree supporting Egyptian banks

The European Bank for Reconstruction and Development just loaned a crisp USD 325 mn to Egypt’s banks to drive SME lending, export growth and the expansion of banks into Africa.

CIB signed an agreement for a USD 100 mn subordinated loan with the European Bank for Reconstruction and Development (EBRD). CIB says the loan qualifies to be included in its tier 2 capital as per the new modifications to central bank regulations. The loan carries a 10-year maturity and will not cause any dilution to equity. CIB says the additional funds will raise its capital ratio to 18.05% from 16.95% and support its future growth plans.

CIB’s growth plans include Africa: Reuters also has the story, quoting CIB boss Hisham Ezz Al Arab as noting that, “CIB will partly use the new funds to back its regional expansion in Africa. The bank received approval from the Central Bank of Egypt about two weeks ago to expand across Africa and is looking at opportunities in countries such as Kenya, Rwanda, Tanzania, and Uganda, said al-Arab. ‘There are a lot of synergies and relations between Egypt and those markets.’”

Among the other banks landing packages from the EBRD:

  • Banque Misr is getting a USD 75 mn loan from the EBRD to support the growth and development of SMEs. “The EBRD credit line to Banque Misr will increase the availability of funding for SMEs by reaching out to new clients and regions outside the Greater Cairo region and Alexandria.”
  • EBRD is extending a USD 40 mn trade facility to Emirates NBD Egypt under its trade facilitation programme. “Through the facility, the EBRD provides guarantees in favour of international commercial banks, covering the commercial payment risk of the transactions undertaken by Emirates NBD Egypt.”
  • Alex Bank is getting a USD 30 mn financing package under a “green economy financing facility” for Egypt from the EBRD and European Investment Bank (EIB). The EBRD will provide a financing facility of up to USD 15 mn for on-lending to private companies for energy-efficiency and renewable energy projects and the EIB is expected to join the facility with an additional USD 15 mn in financing at a later stage.
  • The Arab African International Bank (AAIB) is getting a USD 30 mn loan to support SMEs. The funding will help AAIB further expand its SME lending and will contribute to increased access to finance for small businesses in Egypt.
  • QNB Al Ahli is offered a senior loan of USD 20 mn for lending to local SMEs. “The loan is the first under the EBRD’s new Egypt Women in Business programme which aims to strengthen the role of women in the economy. It provides access to finance through credit lines to local banks as well as business advice, training and support for women entrepreneurs and women-led businesses.
  • EGBank will also receive USD 20 mn to support export/import activity. The amount should allow the bank “to issue guarantees in favor of international commercial banks, covering the commercial payment risk…The EBRD will also provide cash financing for pre-export and post-import financing.”
  • Al Ahli Bank of Kuwait-Egypt is getting USD 10 mn under the EBRD’s Trade Facilitation Programme. Through the facility, the EBRD provides guarantees in favour of international commercial banks covering the commercial payment risk of the transactions undertaken by ABK – Egypt.

In related news, industrial gas manufacturer Gulf Cryo is in talks with the bank for USD 15 mn in funding to help finance 50-60% of their three-year expansion plans in Egypt, country Managing Director Amr El Sahn tells Al Mal. Gulf Cryo will spend EGP 400 mn in the next three years to expand operations at their 6 October and 10 Ramadan City facilities.

Also coming out of the EBRD event yesterday: EBRD has committed EUR 15 mn to a fund of Mediterrania Capital Partners that will invest in SME opportunities in Egypt, Morocco and Tunisia. The commitment could rise to as much as EUR 35 mn as the fund reaches final close, EBRD said.

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