EGYPT Commercial Bank (ECB), Suez Canal Bank and the United Bank of Egypt (UBE) have filed a merger request with the Central Bank of Egypt (CBE). The new merged entity would have a paid-in capital of LE600 million.
The move is meant to meet the CBE's new rules stipulating that banks' minimum paid-in capital be LE500 million. The CBE gave banks until mid 2005 to meet this condition.
The merger request also comes within the framework of a banking sector overhaul revealed in September. UBE was listed among six small banks that would be merged with one of the four public sector banks or other small commercial banks. The six banks are all making losses.
UBE chairman and managing director Hassan Hassanein submitted his resignation to the CBE governor last week. Although he said he had been offered a better post at a financial institution in the Gulf, press reports claimed that he resigned because he would not hold as high a position in the merged entity.
Hassanein had only been in charge of the bank for a year and half.
Developing small business
THE INTERNATIONAL Finance Corporation (IFC), the private sector arm of the World Bank, signed an advisory services mandate last week to assist Egypt's Export Development Bank in developing its small business finance operations. The Private Enterprise Partnership for the Middle East and North Africa (PEP-MENA) -- an IFC technical assistance programme -- will be in charge of implementing the mandate.
PEP-MENA will help the Export Development Bank in developing and implementing relevant strategy, organisation, systems, and products needed to upgrade the quality of services it offers to small and medium enterprises.
The programme is expected to start in December 2004 and last for a period of about 11 months.
During the signing of the mandate, PEP-MENA General Manager Jesper Kjaer said, "in Egypt, large companies have relatively easy access to banks, but small businesses still struggle to get access to financial services. By helping banks profitably target this segment, we will help these enterprises finance their growth and become more competitive."
He pointed out that Egyptian banks are increasingly realising the opportunities available from tapping into this under-served market, since only about six per cent of their activities are currently directed to small businesses.
The Export Development Bank is a joint stock company established in 1983 with an issued capital of LE600 million. PEP-MENA is a $100 million multi donor technical assistance facility managed and co-funded by IFC to support private sector development in the region, from Morocco to Pakistan.