26 Aug. - 1 Sep. 1999
Issue No. 444
|Published in Cairo by AL-AHRAM established in 1875|
Egypt Region International Economy Opinion Focus Culture Features Profile Travel Living Sports People Time Out Chronicles Cartoons Letters
Strong response to CIB's EuroloanBOTH INTERNATIONAL and local financial institutions have responded positively to the Commercial International Bank's (CIB) invitation to subscribe to its second Euroloan. The $200 million loan was fully subscribed by 26 financial institutions. The loan matures after a three-year period that can be extended to five years. It bears an interest rate of 60 basis points over the London Interbank Offered Rate (Libor).
The loan was originally intended to be for $150 million, 80 per cent of which was to be covered by the Bank of Tokyo Mitsubishi, Bank of New York and West LB. However, the strong response has encouraged the bank to increase the value of the loan and to reduce the subscription of the three banks to only 20 per cent of the loan.
CIB plans to use the loan to enhance the bank's foreign currency sources needed for medium-term funding. Moreover, the bank is currently considering expanding its foreign currency-denominated investments.
CIB was planning earlier this year to offer Eurobonds, but it decided to replace these with a loan after it became apparent that the cost of the loan will be lower. The loan is CIB's second. Its first, a $200 million facility, was signed in April 1997 and matures early next year. CIB was the first Egyptian bank to tap the international loan market, and it was followed by the National Bank of Egypt which got a $250 million syndicated loan four months ago.
Sluggish industryTHE FINDINGS of the third survey of the Egyptian industrial sector carried out by The Egyptian Centre for Economic Studies (ECES) showed disappointing results for manufacturing sales.
The survey, entitled 'Industrial Barometer', samples 165 companies, 91 of them public and 74 private. It examines the performance of the manufacturing industry over the past six months and reviews prospects for the rest of 1999. The survey evaluates economic indicators such as production, sales and prices.
Contrary to expectations, sales of the manufacturing sector to domestic and international markets did not recover. Roughly the same number of firms reported decreases in sales as those reporting increases in domestic and international sales. Overall, the rate of expansion in the industrial sector has been slower than anticipated.
While it is assumed that the worst of the global financial crisis is over, in Egypt recovery in general has been slow, and commodity prices have only partially rebounded.
Nevertheless, in spite of unrealised expectations for the first half of 1999, predictions for the second half of the year are more optimistic. Projections indicate increasing economic growth and larger sales, both domestically and abroad.
The survey showed that 27 per cent of private sector firms plan to increase their workforce, provided their production and sales targets are met.
Meanwhile, the public sector expects a further reduction in its workforce as a result of early retirement schemes currently being implemented by the government as part of its economic reform programme.
Mobile bondsTHE EGYPTIAN Company for Mobile Phone Services (MobiNil) announced this week that it is offering LE102 million worth of bonds for public subscription by the end of the first week in September. The bonds, with eight-year maturity, will bear an interest rate of 12.25 per cent to be distributed biannually. They are negotiable but cannot be converted into shares.
The offering represents 30 per cent of the total LE340 million bond issue MobiNil is currently floating. The remaining 70 per cent, valued at LE238 million, has already been covered through private placement by 19 investors including the National Bank of Egypt (NBE) and the Commercial International Bank (CIB).
UBE wins EAABUNITED Bank of Egypt (UBE) has succeeded in acquiring a 75 per cent stake in the Egypt Arab African Bank (EAAB) after a fierce competition involving three other Arab and foreign financial institutions. The other bids were presented by France's Credit Agricole Indosuez, the National Bank of Kuwait and Bahrain's Arab Banking Corporation.
In addition to its compliance with the conditions set by the Central Bank of Egypt, UBE's bid was chosen because it offered the highest price for the shares. The overall value of the deal is LE298 million or LE53 per share. This compares with the LE40 value of the bank's shares currently traded in the stock market.
UBE is planning to acquire another stake in EAAB to increase its holdings to 93 per cent which would bring its investment in the bank to LE356 million.
The new entity formed after last week's acquisition has a vast network of 20 branches. This acquisition is the first step in the UBE's plan to form a banking group with a capital of LE1 billion, according to a senior UBE official. The bank is also planning to bid for a yet unidentified joint venture bank slated for privatisation in the near future.
The sold stake includes the 56 per cent share owned by Arab African International Bank and it's employee pension fund, while the remaining 19 per cent represents a part of El-Maghrabi Group's holdings in the bank. EAAB's assets totalled about LE1.2 billion at the end of June. It posted profits of LE19.7 million during the first half of 1999.
UBE was established in 1981 under the name of Dakahliya Commercial Bank. Its name was changed in 1997 to United Bank of Egypt following a takeover by a group of private investors.
Millennial economiesEMERGING Arab Economies: A Gateway to the New Millennium is the title of a three-day conference to be held in mid-September in Cairo. The event is co-sponsored by the publisher of the British magazine Euromoney together with Egypt's International Economic Forum, a non-governmental organisation founded in 1998 by a group of businessmen to support the country's economic development. The conference is the third to be held under the auspices of Euromoney in Egypt.
The meeting will highlight issues related to developing Arab economies and increasing regional economic integration. The speakers will discuss globalisation and privatisation issues and the challenges of emerging economic blocks.
AXA wins insurance bidEGYPT'S insurance sector witnessed an important development last week: one of its crown jewels attracted the interest of an international insurance company. The French insurance firm AXA has agreed with the state-owned Misr Insurance Company to buy a 35 per cent equity stake in its affiliate Arab International Insurance (AII) for $36,667 a share by the end of this month. AXA's offer was chosen from a number of bids submitted by Arab and foreign insurers, including Germany's Allianz.
AXA's success was attributed to its offering the highest bid. While the face value of the sold stake comes to only $2.1 million, the purchasing price was $7.7 million. AXA is ranked the eighth insurance company worldwide in terms of the value of its assets.
The deal comes two months after El-Shark Insurance mandated Hong Kong and Shanghai Banking Corporation to evaluate its affiliate Egyptian American Insurance Company as a preliminary step to its privatisation.
These moves come within the framework of Egypt's long-awaited insurance sector privatisation which was given the go-ahead last year. At that time, parliament approved amendments giving foreigners the right to own up to 100 per cent of local insurance companies.