Public sector banks, privatization under study
The Egyptian government has launched a series of important consultations on privatizing the remaining joint venture banks and examining the best method of privatizing the public sector banks with the aim of enhancing the existing banking entities, besides the best way for achieving this goal, as an initial step towards preparation for the final application of the GATT agreement in the field of services and going ahead with the economic reform program which was launched in the early l990s.
The donor countries, in the context of the pledges they made to Egypt during the Sharm El-Sheikh summit, had suggested to the Egyptian government the importance of going ahead with the liberalization steps needed for the Egyptian economy, such as privatizing one of the public sector's banks and one public sector insurance company.
Moreover, the board of directors of the central bank of Egypt (CBE) had reviewed at its last meeting an important study chalked out by Misr Bank on the use of merger as one of the privatization methods.
The study also underlined the need for restructuring financial services in Egypt with the aim of creating a regional financial center in Cairo.
Ahmed Al-Baradei, Chairman of the board of directors of banque Du Caire underlined the need for strengthening the banking industry for financial services capable of providing short and long-term financing, together with other financial products needed for securing sustained growth of the Egyptian and Arab economies.
He said this industry would serve as a nucleus for establishing a strong financial centre in Cairo.
In an interview with "Al-Ahram" newspaper, Al-Baradei said the whole world has started to reinforce its banking industry as an initial step towards opening the door wide before banking competition, adding that all the countries have embarked on such a step in order to minimize the number of banking units and enhance their position through voluntary or obligatory merger.
He said privatization of one of the public sector's banks as one of the elements of economic reform program and is a step which was taken belatedly for many reasons, such as availability of legislations which allows privatization through merger the only way to privatize the public sector banks, Albaradei said, is through merger in order to set up strong and integrated financial establishments which have the capability to withstand well-studied risks for longer periods and in bigger volumes.
This could be attained through a strong administrative and financial structure that allows these banks to compete with giant world entities, not only in Egypt but all neighbouring countries.