Egypt’s cabinet approves new Banking and Central Bank Act
LEGISLATION WATCH- Cabinet greenlights Banking Act: The Madbouly Cabinet has approved in its weekly meeting a 242-article final draft of the Banking and Central Bank Act that would grant the Central Bank of Egypt (CBE) increased oversight of the banking sector, according to a cabinet statement. The draft will now head to the Council of State before being introduced to the House of Representatives. As we noted in our legislative preview on Monday, the Banking Act is among the key bills expected to keep the House busy this fall. CBE Governor Tarek Amer, who was present during the cabinet meeting yesterday, handed over the act last May.
The CBE will hold a presser today to discuss the act, the final draft of which was seen by Enterprise.
No ‘industry development’ tax: The industry development tax, unpopular with investors and the banking community, has been set aside in favour of an industry-wide 1% tithe on profits to finance a bailout fund that would insure banks against bankruptcy. The act also lays out procedures for how banks would file for bankruptcy protection.
No term limits for MDs? The imposition of term limits for bank managing directors that had previously been controversial with the banking community and bank shareholders did not appear to be included in the draft we reviewed.
The law, if passed in the form we saw, would also:
- Introduce measures for licensing e-payment and fintech businesses and explicitly authorize the CBE to regulate cryptocurrencies;
- Update licensing and ownership regulations, with the inclusion of a stipulation that no one individual or a related group could hold more than 10% of a bank’s equity without prior approval of the central bank;
- Hike, as expected, the minimum capital requirement 10x to EGP 5 bn and 3x for foreign banks to USD 150 mn;
- Establish a “financial stability” committee to prepare for and avert financial crises. The prime minister, the CBE governor, the finance minister and the chair of the Financial Regulatory Authority would all sit on the committee;
- Set up an industry association for the sector. (It is unclear whether this is in reference to the Federation of Egyptian Banks or a new entity.)
- Introduce measures to ensure data protection and customer privacy, including requiring banks to obtain written consent for indirect or direct data dissemination;
- Require all banks’ fiscal years to begin in January (many state-owned institutions end their FY on 30 June, as does the government);
- Require banks to publish quarterly financials in at least one daily newspaper and on their websites;
- Give banks 1-3 years to comply with the new provisions of the law;
ALSO YESTERDAY- Cabinet signed off on a new unified tax payment system that will see MPs debating a bill to create a single tax filing system for income tax, stamp tax and VAT. The bill was first reviewed by cabinet in July. Ministers also signed off on an amendment to the Press and Media Actallowing media outlets to contribute to public-interest campaigns.