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Monday, 7 October 2019

Egypt’s United Bank sale moving forward, Amer says

M&A WATCH- United Bank sale moving forward: The CBE has appointed one local and one foreign lead advisor on the expected sale of state-owned United Bank, which is “moving forward,” CBE Governor Tarek Amer told reporters at a presser on Thursday, according to Reuters. Authorities should approve the banks’ names within one week, he added.

The contenders: The local press reported earlier this year that three consortiums were formed to compete for the role. The consortiums include one comprising EFG Hermes and New York-based Evercore, one Beltone Financial and Rothchild & Co, and another CI Capital and Perella Weinberg Partners. Sources also said at the time that the sale — the size of which will depend on the chosen investor — has attracted substantial interest from foreign institutions, including a potential offer from Evercore. The central bank owns 99.9% of United Bank’s shares, having created the institution through the merger of a number of smaller institutions.

Amer also touched on changes that are on the way for the banking sector under the proposed Banking and Central Bank Act, which we unpacked on Thursday morning following its approval by cabinet. Among the highlights from the presser:

  • The CBE is hoping to transform Egypt into a regional hub for financial services, Amer said, calling on banks to diversify their portfolios by investing in a wider range of debt instruments and expand both regionally and internationally.
  • New digital banks: The central bank is working with four foreign advisors to set up digital banks “for the first time in Egypt,” CBE sub-governor for payment systems and business technology Ayman Hussein said.
  • A EGP 2 bn holding company: The CBE is also launching an EGP 2 bn holding company before the end of the year to assist the government’s financial inclusion and digitization efforts, Hussein said. The company will start off with EGP 500 mn in paid-in capital.
  • Banks need not worry about capital requirement hike: The shareholder rights, paid-in capital, and reserves of as many as 28 commercial banks are already sufficient to allow them to meet 10x hike in the minimum capital requirement to be stipulated by the act through a few “simple procedures,” deputy governor Gamal Negm said.
  • New professional licenses for banking sector: The act would require high-ranking bank officials to obtain a new type of CBE-issued professional license.

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