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Sunday, 8 March 2020

Major international bank seeks entry into Egypt

Major international bank seeks entry into Egypt: An unnamed “major” international bank has approached the Central Bank of Egypt (CBE) to acquire a banking license, Deputy Governor Gamal Negm said on the sidelines of an ongoing forum held by the Union of Arab Banks in Hurghada, according to Al Masry Al Youm. Negm provided no further details.

Why we’re keeping a close eye on this: The CBE has since the late 1990s and early-to-mid 2000s refused to issue new licenses, pointing potential market entrants — foreign and domestic — to acquisition targets from among Egypt’s nearly 40 licensed banks. This could change — central bank governor Tarek Amer said in 2018 that the CBE is considering a rule change that could see it offer a limited numnber of new licenses to international banks wanting to enter the Egyptian market.

Could the new entrant be “a specialized bank”? The CBE will likely only grant new licenses to so-called “specialized banks,” says Fitch Ratings’ Zeinab Abdalla. This is because out of the 39 banking licenses in the country, only three are for bankers who work with certain subsets of clients, including SME owners, creating a larger market need for those types of dedicated services. The commercial space is also dominated by giants including National Bank of Egypt, Banque Misr, and CIB, Abdalla added.

Background: The CBE is currently studying new licenses for SME-focused lenders and digital banks, both of which will be exempted from the new capital requirements in the proposed Banking Act, a senior official told us last month. The capital requirements for those banks would be set on a case-by-case basis, but will not be subject to the EGP 5 bn floor applied to commercial banks.

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