3 possible options for the future of Banque du Caire.. What is the best scenario for the deal?

02:20 PM

Tuesday 07 February 2023

I wrote – Manal Al-Masry:

Sources familiar with the qualification of Banque du Caire for a potential deal told Masrawy that there are 3 options to be compared to implement the plan to sell Banque du Caire, which was suspended for 3 years, with Prime Minister Dr.

The options available to Banque du Caire for sale, in part or in whole, include: offering a share of its capital in the stock exchange, selling a share to a Gulf fund, or selling the bank to a strategic investor, but deciding any option in it will be based on the decision of its main owner, Banque Misr, in coordination with The Central Bank and the Ministry of Finance, according to the sources.

Tarek Fayed, Chairman of Banque du Caire, said in previous statements that the bank is ready to be offered on the stock exchange at any time the main owner deems necessary to take the decision according to the appropriate times, as the bank’s business indicators reflect high levels of growth.

And in 2020, the Corona virus caused the postponement of offering between 25% and 30% of Banque du Caire’s capital on the Egyptian Stock Exchange due to bleeding losses on global stock exchanges and their potential consequences on the share price.

The plan to sell Banque du Caire – which is one of the 10 largest banks in the banking system – dates back to before 2010, and in order to implement this goal at that time, the bank’s law was changed and its ownership was transferred to Misr Financial Investments Company owned by Banque Misr to facilitate the sale process.

However, all attempts to sell the bank were unsuccessful due to internal factors and unfavorable global economic conditions.

Mohamed Badra, a banking expert and a former board member at Banque du Caire, said that selling the bank to a strategic investor is the best option out of the currently available options, such as what happened with the Bank of Alexandria by virtue of previous experiences in acquisitions and sales in the banking system, as well as the futility of owning The government is many banks.

Thirteen years ago, the government sold 80% of the Bank of Alexandria’s capital to the (Italian) Intesa San Polo Group, in a profitable deal amounting to about $1.6 billion, in return for the state, represented by the Ministry of Finance, retaining 20% ​​during a period during which the government described the implementation of (privatization) programmes, i.e. The state exits from its assets in favor of the private sector.

Badra explained that the investor usually tends to buy shares from a bank offered on the stock exchange in the event that it is from one of the major private banks that has a spread and large liquidity rates such as the Commercial International Bank, and despite the registration of Bank of Cairo shares on the stock exchange, they are still not traded.

The Abu Dhabi Sovereign Fund acquired an 18% stake in the total capital of the Commercial International Bank last year.

Some investors also prefer to buy a controlling stake in government banks, like what happened with the Bank of Alexandria, and here the foreign investor will have the largest stake, or buy the bank as a whole, according to Badra.

Mohamed Badra added that selling the bank to a strategic investor would be better at all levels, as the Egyptian banking system might get richer with the presence of a bank with new expertise, as well as the investors’ preference to monopolize the management to implement its expansionary policy as planned.

Last January, Banque du Caire submitted to the Egyptian Stock Exchange documents registering the authorized capital increase from 10 billion to 20 billion pounds, and registering the issued and paid-up capital increase shares.

According to the stock exchange statement, the shares of the issued capital increase were registered from 5.250 billion pounds to 10 billion pounds, with a cash increase of 4.75 billion pounds distributed over 2.375 billion shares, with a nominal value of 2 pounds per share.

The Egyptian Stock Exchange had announced, before the end of last April, the implementation of a deal to transfer ownership of Banque du Caire shares through the mechanism of large-volume transactions (BLOCK TRADING) on the bank’s shares, with about 1.125 billion shares, at a value of about 6.97 billion pounds.

Mohamed El-Etreby, Chairman of Banque Misr, explained, in previous press statements, that this procedure means the return of Banque du Caire’s ownership to Banque Misr in a deal worth 7 billion pounds, in order to restructure Banque du Caire’s ownership to be under Banque Misr, instead of Misr Capital, a subsidiary of Banque Misr. Egypt.