1. Banking
The Banking industry in Egypt is amongst the oldest and largest in the region. In the nineties, as part of Egypt 's economic and financial reform program, the banking sector was completely liberalized, while banking supervision was further strengthened in accordance to international standards. The 49% limitation on foreign ownership in domestic banks was lifted, service fees and bank charges were freed, and competition between banks was left for market forces to determine. In addition, banks were set free to determine their lending and deposit rates and spreads, while the role and size of the inter-bank market has become quite significant.
Currently, there are 63 banks operating in Egypt , with 2,386 branches in addition to 26 representative offices for foreign banks. These include the four big state-owned banks _ the National Bank of Egypt , Bank of Alexandria, Banque du Caire and Banque Misr. The four state-owned commercial banks dominate the sector, accounting for nearly 57% of total assets, and holding 70% of deposits and 59% of loans. . However, state-owned banks generally suffer from low capitalization; a high percentage of poorly performing loans, and massive overstaffing.
Private-sector commercial banks are superior to public banks in terms of service quality, profitability and transparency. There are four large private sector banks which account for the bulk of interest on the part of foreign investors, counter parties and brokers: the Commercial International Bank, Egyptian American Bank, Misr International Bank and National Societe Generale bank. Alongside these joint venture institutions, HSBC and Citibank have ambitious plans to expand in Egypt through wholly owned or controlled subsidiaries.
Generally speaking, though Egypt is perceived as over-banked with the expanding local banks - continuously opening new branches - the extended services are quite basic, particularly in the retail sector. There is no central clearing and although credit card usage is growing, Egypt is still largely a cash economy. Short-term lending makes up about 80% of the major banks' portfolios and it is estimated that only one in ten Egyptians has a bank account. However, this underdeveloped retail market offers substantial opportunities especially international banks that wait for the opportunity to attract hundreds of thousands, if not millions of new depositors at relatively low costs. One major attraction of Egypt is its major population concentrated in its two big cities, Cairo and Alexandria , which together have a combined population of 18-19 million people. They also account for the majority of the middle class Egyptians. Thus, the cost of developing a branch network and its associated IT network is relatively low.
As of November 2001, total deposits amounted to LE 307,985 billion, total credit reached LE254 billion, and net international reserves stood at US $14.5 billion. Judging by the results of the larger private banks at the end of 2001, liquidity in the banking sector seemed to have eased over the year largely as a result of the increase in deposits. The aggressive expansion of many of the private sector banks into the retail market- with many of the players opening new branches- has increased deposits and eased loans/deposits ratios.
Concerning banks privatization_ because the sector is over-banked _the CBE has been refusing to grant new licenses lately, preferring that international institutions that wish to enter the market would do so through acquiring an existing bank. Investors were particularly attracted to smaller commercial banks that offer less risk. In 1999, the Arab Banking Corporation, a large consortium bank based in Bahrain bought Egypt African Bank. On the other hand, foreign partners in the existing joint ventures have raised their stakes in their Egyptian associates. Among international banks that followed this path were: Barclays of the UK , BNP Paribas of France, Credit Agricole Indosuez, as well as HSBC of the UK which raised its stake in what was then the Egyptian British Bank from 40% to 90%.
Among Egyptian Banks that are up for sale are: Arab African International Bank, Cairo Far East bank, Misr Iran Development Bank and Misr America International Bank. Advisors have already been appointed for the first two
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