Egypt News

Egypt’s NDP officials say the plan will help low-income citizens, but critics note that long-term benefits would be lost on the poor, who are generally not bourse-savvy and would prefer to just sell off their shares for immediate gain.

In June, the Egyptian government called off the auction of state-owned Banque du Caire, citing below-value bids from the five foreign banks that submitted offers

The Banque du Caire auction, first announced in July 2007, has sparked public outrage, with some critics claiming that the sale of national assets was a threat to national security, and others alleging that the privatization process was corrupt.

For his part, the Egyptian Prime Minister Ahmed Nazief announced that Egypt’s government fails to privatize its third largest bank, calling the five bids 'inadequate'

It came after receiving five of what it said were inadequate bids, the Egyptian government announced in June that it would postpone, the privatization of its third largest bank, Banque du Caire.

Prime Minister Ahmed Nazif reported in 2007 that the state would auction off a 67% stake in Banque du Caire after the government abandoned an earlier merger between the bank and Banque Misr, the second largest state-owned bank, because of concerns the latter would end up assuming Banque du Caire's multi-billion-dollar deficit and non-performing loans.

The merger was initially slated to be part of the banking sector reforms initiated in 2004 that included consolidating state-owned banks over a five-year period.

Nazif and other officials were optimistic that privatizing the Banque du Caire, which accounts for 6% of the local banking sector, would bring in even higher bids than the $1.6 million (LE 8.85 million) that Sanpaolo of Italy paid to acquire 80% of Alexandria Bank in 2006. But when bids from

Standard Chartered PIc of London, Samba Financial Group of Saudi Arabia, National Bank of Greece SA, Mashreqbank of Dubai, and a consortium of Saudi Arabia's Arab National Bank and affiliate Arab Bank Group of Jordan didn't meet expectations, the government called off the sale.

The National Bank of Greece, the highest bidder, valued the bank at around $2 billion (LE 11 billion) and would have paid about $1.36 billion (LE 7.5 billion) for the 67% stake, a bid that which fell short of the Egyptian government's expectations by about $250 million (LE 1.38 billion).

Beltone Financial, according to Reuters, said that the Greek bank's offer was fair and that the bids were not as high as those for Alexandria Bank because the government had renovated that bank's branches, trained staff, and cleaned up its portfolio and non-performing loans prior to the sale.

The announcement of the auction's failure sent the EGX index downward 1.3%. Shares of Commercial International Bank (CIB), the EGX's most traded bank stock, also dropped 5.2%.

During a Euromoney Egypt Conference in October, the Egyptian Investment Minister Mahmoud Mohieldin said he did not regret the decision to cancel the sale even though many finance experts thought the bids were fair. He added that the prime minister will reconsider the possibility of selling the bank "when time allows."

EGYPT NEWS