BC saga continues
THE HEATED debate and public uproar against the sale of Banque du Caire is unprecedented since Egypt started its privatisation programme in the early 1990s. Since the government revealed its plan to privatise the bank on 7 July, hardly a day passes without a senior banker, government official or opposition leader being interviewed by the media either to defend the sale or to prove it wrong.
While most opposition parties demonstrated utter rejection of the idea, the Wafd Party took their opposition a step further. The party launched a campaign to collect signatures on a petition directed to the prime minister to change his mind. The petition calls for floating the bank as a whole on the stock exchange, and hence opening the door for the public to subscribe in its shares, rather than selling the bank to foreigners.
The party's mouthpiece, Al-Wafd daily, has dedicated its back page every day last week to publish the petition surrounded by interviews of people opposing the sale. The petition does not only call for letting Egyptians subscribe in the bank's capital, but also to collect money to cover the provisions needed to end the Banque du Caire's non-performing loans portfolio. The Bar Association opened a bank account at Banque Misr to receive deposits from Egyptians only to be used in subscription if the bank is floated.
The bank's capital is LE1.6 billion and the government announced that it needs LE12 billion to restructure its loan portfolio. This puts the overall needed figure at around LE13.5 billion. The idea is not accepted by most economists and capital market analysts who believe that the market is not mature enough to handle such a huge IPO. Even if it does, they argue, dividing the bank's ownership between thousands of Egyptians will add to the bank's long list of problems. A recurrent point in the anti-sale argument is that the Banque du Caire's main problems emerged from government mismanagement.
The ousted former head of Banque Du Caire Ahmed El-Bardaei was quoted by the independent Al-Masry Al-Yom daily last week calling on those who "misappropriated public funds" to show where all the money went. El-Bardaei said that when he took his position he found out that 74 per cent of the bank's overall non-performing loan portfolio were directed to 46 influential businessmen. He stressed that his efforts to end the policy of lending money to what he calls "privileged few" went in vain. He even claimed that the government refused to provide him with LE6 billion to solve the bad loans issue.
El-Bardaei was said to be expelled from the bank two years ago as the defaulted businessmen complained to the government from his strict way in dealing with their debt rescheduling plans.
According to recent letters seen by Al-Masry Al-Yom between Banque Du Caire, the Central Bank of Egypt (CBE) and the Central Agency for Public Mobilisation and Statistics (CAPMAS), Banque Du Caire said it preferred to address the defaulters' problems using "friendly means", ignoring CBE's request to deal with the issue. When questioned by CAPMAS about those "friendly settlements", Banque Du Caire replied that measures will be taken against them if they do not pay according to the settlement plan without elaborating on these measures.