Briefs

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BoA re-graded

THE BANK of Alexandria's (BoA) financial strength rating was upgraded this week to D- with a stable outlook, from E+ with a positive outlook. The rating agency, Moody's Investors, cited improvement in the bank's financial fundamentals as the reason for the change in grade. The bank's foreign currency deposit ratings remained unchanged at Ba2 with a stable outlook, which is Egypt's country ceiling for foreign currency deposits.

Moody's press release stated that there were significant improvements in the bank ahead of its pending privatisation, as well as its disposal of the public enterprise non-performing loans portfolio to the National Investment Bank for LE6.9 billion in cash in January. The move significantly improved its asset quality indicators.

Another positive measure was selling some of BoA's non-core assets and realising revenues in excess of LE3.5 billion. Non-core assets mainly consisted of equity investments, including a 33.8 per cent stake in the Egyptian American Bank. According to Moody's, this enabled the bank to build up its private sector loan/loss reserves and significantly increase its capital base. BoA's upgrade also takes into account the progress made over the past few years in restructuring the bank.

BoA has strengthened its credit risk systems and controls, is implementing a new integrated IT system, has reorganised its internal organisational structure, improved the level of automation and is making efforts to diversify its product range, stated Moody.

Under-skilled staff and 'public sector mentality' will, nevertheless, require ongoing efforts to improve. Other criticism was the fact that BoA's lending franchise and product variety still lags behind its private sector competitors.

Privatisation amended

PRIME Minister Ahmed Nazif announced this week that a new article would be added to the executive charter of the Public Enterprises Law. Article 26 obligates the minister of investment to present the cabinet's economic group and the minister of manpower with the procedures of privatising any public company, before taking any serious steps in the divestment of the company.

Observers believe this is a step to calm growing criticism of the privatisation process after a number of recent deals -- especially those of Omar Effendi and Yassin Glass factory -- stirred a public firestorm over the evaluation process and protecting the rights of workers. The cabinet economic group includes the ministers of planning, finance, investment, industry and trade, in addition to the governor of the Central Bank of Egypt.

Meanwhile, Minister of Investment Mahmoud Mohieddin ruled out plans to privatise any of the state- owned spinning and weaving companies. Mohieddin revealed to the Shura Council's economic committee on Monday a plan to restructure some of these companies, especially Al-Mahalla and Kafr Al-Dawar for Spinning and Weaving companies. Together, they are earmarked to receive LE1.4 billion in new investments to upgrade machinery and increase the productivity of its workers.

Seeking a spot

AL-AHLI United Bank is looking to establish a presence in the Egyptian market. The bank, which is headquartered in Bahrain, recently formed a consortium, along with three Kuwaiti institutions. The consortium carries the name Strategic Nile, and aims to acquire one of the Egyptian banks which are currently up for sale. Strategic Nile started its operations by beginning due diligence of Delta Bank, after it received the approval of the Central Bank of Egypt.

The consortium includes the Wafra International Investment Company which was established by the Kuwaiti Public Institution for Social Security. It includes as well the Strategic Company and the Bank of Kuwait and the Middle East, which is 75 per cent owned by Al-Ahli United.

Al-Ahli United had previously competed for Misr International Bank (MIBank), but lost to the National Societe Generale Bank.

Besides the 75 per cent stake in the Bank of Kuwait and the Middle East, it also owns 79 per cent in the Commercial Bank of Iraq, as well as 40 per cent of Al-Ahli Bank of Qatar.

Canadian Chamber in Egypt

THE FIRST-ever Canadian Chamber of Commerce in Egypt was established last week, with the aim of facilitating bilateral trade relations between Canada and Egypt and fostering their mutual dialogue and support. According to Fayez Ezzeddin, chairman of the newly- found entity -- the first in the Middle East -- the chamber will act as a facilitator on behalf of the business communities in both Canada and Egypt. Its objective will be to help them communicate, in order to achieve successful business together. Creating the opportunities for interaction was the main objective of the new chamber, Ezzeddin said. In 2005, the trade balance between Egypt and Canada stood at $500 million. The figure is expected to rise to $3 billion in the next three years, according to Ezzeddin. A high-level Egyptian business delegation led by Minister of International Cooperation Fayza Abul-Naga is currently in Toronto to meet with their counterparts, and discuss means of cooperation. The mission was organised by the Canadian-Egyptian Business Council (CEBC).