Back to the complete issue
Sunday, 23 May 2021

CBE to issue regulatory framework for specialized banks by July?

Specialized banks could have a regulatory framework by July under proposed amendments to the newly passed Banking Act which would see the issuance of licenses for banks focused on SME, digital, and payments banking, unnamed banking officials told Masrawy. The framework, to be issued by the Central Bank of Egypt, would clearly outline the approach the CBE plans to take to the still-nascent sector.

So, what’s a “specialized bank”? Think “digital.” Broadly speaking, it’s a term that has come to include upstarts that would (a) be “digital first” by eschewing brick-and-mortar branches; or (b) focus on small and medium-sized businesses or (c) reach out to the unbanked, including through services including small savings accounts and remittances.

The CBE has so far received five applications from banks wishing to launch a digital banking arm — including the National Bank of Egypt, Banque Misr, Emirates NBD, QNB Al Ahli and Bank ABC — but will begin studying them once the law is approved, sources previously told Masrawy. Media reports also suggested Baraka Bank and the Suez Canal Bank were interested in getting in on the digital banking space.

Specialized banks are exempt from new capital requirements in the proposed Banking Act: Under the legislation, the amount of capital these banks would be required to hold would be set on a case-by-case basis, exempting them from complying with the EGP 5 bn in reserve mandated by the law for local commercial banks. Banks that apply for the license would need to submit a market study and risk assessment, after which the CBE would set reserve capital requirements, deposit limits, and their ceiling for lending.

Already-licensed commercial banks won’t automatically be granted a specialized banking license, meaning that only new banks and subsidiaries of existing ones can be defined as digital-first entities, with all banks currently operating in Egypt defined as commercial banks under the 2003 Banking Act, a CBE official previously told us.

Need a refresher on the new Banking Act? We have a rundown of the key provisions here.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.