Al-Ahram Weekly | Economy | How safe are the banks?

		Al-Ahram Weekly On-line 7 -13 December 2000 Issue No.511
Published in Cairo by AL-AHRAM established in 1875		Current issue \| Previous issue \| Site map

How safe are the banks?
By Shaimaa Labib
The armed robbery of the National Bank of Egypt (NBE) Al-Maragha branch in Sohag highlighted the inadequacy of security measures at the majority of public sector Egyptian banks.
Banking and security officials are pointing the finger at each other over the lapses that allowed the robbery to take place. And, regardless of who is at fault, LE600,000 was taken and 10 people were killed and 11 injured in the tragedy which occurred almost two weeks ago.
"The armed robbery revealed many security shortcomings at [Egyptian] banks -- both internal and external," said Hani Seif El-Nasr, CEO of the Arab Banking Corporation Egypt (ABC). One important safety feature revealed to be lacking at the Al-Maragha branch was a walk-in safe.
"The bulk of cash available in any bank should be located in such a room," said Seif El-Nasr, citing the instance of his bank where "we have a 'strong room' where cash is deposited. Tellers in the bank only have small amounts of cash on hand."
The majority of banks depend on security firms to protect them from bank robbers. These companies, which are contracted by a wide range of establishments, tend not to have the specialised knowledge to adequately secure a bank. Even in the many banks which have expensive electronic security systems, "hired security personnel are not aware of the nature of the security challenges faced by banks," Seif El-Nasr said.
To address these shortcomings, Seif El-Nasr suggested that a company specialised in banking security be established. Such a company, he added, should be set up under the auspices of the Central Bank of Egypt (CBE) or the Federation of Egyptian Banks.
A company for banking security, said Seif El-Nasr, "should include personnel from the Ministry of the Interior, who are qualified to train security personnel and implement more efficient security procedures. Concerning funding, this would be provided by Egyptian banks wanting to raise security standards," suggested Seif El-Nasr.
One simple measure to deter robbers and reduce the size of losses, which has been suggested in the aftermath of the Al-Maragha robbery, is to limit the amount of cash available at any branch. Currently, the majority of Egyptians conduct their financial transactions in cash. But, according to Seif El-Nasr, such preferences can be changed. "When cash available at a bank is minimised, dealings in credit cards and checks will increase. This is more efficient and practical than dealing in large amounts of cash."
Security officials say that the Al-Maragha incident highlights the need for banks to spend more on security. "Banks realise huge profits; however, they do not spend enough on security. More money needs to be spent on technologically advanced security systems and devices, such as electronic gates, bullet-proof rooms and bullet-proof glass in front of every bank teller," said an official from the Ministry of the Interior, who spoke to Al-Ahram Weekly on condition of anonymity.
Effective security, said the Ministry of Interior official, requires cooperation between the state and banks to develop a security strategy for Egyptian banks.
A key revelation of the Al-Maragha tragedy was the inadequacy of the training received by bank security guards. Currently, such positions tend not to be held by people sufficiently qualified for this critical job. "The majority of guards who are assigned to banks tend to be middle-aged and many do not have sufficient training in the use of the weapons that they are provided," he added.
Not only guards, but also police forces were blamed by people in the banking sector for their handling of the hold-up.
According to a former CEO of a state-owned bank, who spoke to the Weekly on condition his name be withheld, the NBE Al-Maragha branch had installed an alarm system connected to the nearest police station. However, when the bank manager sounded the alarm, police failed to respond, forcing him to telephone the station.
Following the telephone call, "more than 45 minutes elapsed before police arrived on the scene," said the former CEO. Such a lapse provided ample time for the robbers to commit their crime and flee, he added.
According to the former CEO, adequate security measures are too costly for banks to bear on their own. This is especially the case for public sector banks.
"An alarm system typically costs LE36,000, plus LE5,000 annually for its maintenance. On average, an individual bank pays LE24,000 a year to security agencies for providing them with a 'second-rate' guard to secure the bank from the outside," he said.
These measures fall far short of the advanced security systems and procedures used abroad, says the former bank official. "Most Egyptian banks cannot afford to implement such measures on their own," he said.
For a single bank branch in Europe or the United States, security systems start at a few thousand dollars, but can run in the millions, said the former CEO.

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