IN JANUARY AND February this year, as revolution coursed through Cairo and beyond, Egypt’s central bank governor, Farouk Abd El Baky El Okdah, called the heads of the country’s main banks to a series of urgent meetings at the Cairo Marriott on Zamalek Island in the middle of the Nile.
"We were called for meetings every two days with the central bank governor," recalls Barclays’ country head, Khalid El Gibaly. "It was off-site at the Marriott, we were not even to go to the central bank head office." That’s because to do so would have left bankers, particularly those coming from Cairo’s downtown or from the western Giza side of the Nile, with the then dangerous, near impossible trek through the clogged Tahrir area. And, with the country on fire, and the blaze threatening to spread to the financial system, Okdah demanded that everyone show up at the Marriott.
It’s only 800 metres from the Marriott across the Nile’s Sixth October Bridge to Tahrir Square. From the hotel, anxious bankers, many of whom had reluctantly left neighbourhood posts keeping potential looters at bay to come to the meetings, could hear and smell the uprising – the million-strong roar of protest rising from the square, the headquarters of Hosni Mubarak’s disgraced National Development Party smouldering by the riverside.
These were extreme times and if ever there was a moment to display one’s independence from government (as many central bankers claim to do but rarely actually achieve in practice), this was it. The country was in chaos, the system was crumbling, the economy had largely ceased to function – Crédit Agricole estimated that the month-long revolution cost the economy at least $300 million a day; other estimates were higher – and vigilantes roamed the streets as police abandoned their posts. And Mubarak, who had appointed Okdah in 2003, was grimly holding on.
In the midst of this anarchy, bankers fretted that their branch networks would be overwhelmed by angry, desperate depositors. There were already rumours of runs on banks. Barclays’ Khalid recalls "a tough few days in the battlefield going around my branches seeing hundreds of customers queueing. There was the start of a run, on everybody." In wealthy Nasr City’s Abbas El-Akkad Street, where many banks have branches, Khalid says: "It was a sight to see. It was crazy because there were mile-long queues out of every bank branch, without exception."
And then there were the private calls to field from regime members, from cronies who had got richer the closer they were to the Mubaraks. They wanted their cash too, and fast before they fled, a particular issue for the state-owned market leader, National Bank of Egypt. (Egypt’s newly formed Illicit Gains Authority has claimed that Mubarak’s wife, Suzanne, kept an account with a $145 million balance at the NBE’s Heliopolis branch. She has admitted to – and handed back to the state – an NBE account with $4 million in it.)
"We discussed two things very clearly," recalls Khalid. "One was convertibility and we had to ensure that was seen as free and possible any time in any quantity for any individual. The other was transferability, to ensure there is confidence in the FX markets, unlimited." The dominant NBE, sometimes seen as a de facto central bank in Cairo, even volunteered to fly in dollars in cash from abroad to service customers and other banks.
The Central Bank of Egypt also injected dollars from its reserves. Indeed, Egypt’s reserves have fallen from about $36 billion pre-revolution to about $25 billion today, partly explaining why the Egyptian pound has traded in a narrow, some say artificial, 5.67 to 5.97 range to the dollar since January 1, one of the world’s most stable currencies this year. For foreign investors willing to plunge into Egyptian treasuries or stocks there was free transferability, not that many took advantage of this.
Another of the Marriott meetings’ participants remembers: "We made plans. We didn’t know if they’d be workable plans, but little was left unsaid." On the table were myriad micro issues: bank and staff security, how to maintain liquidity and confidence, the logistics of physically moving money around the country. And then there was the macro picture: stabilizing the currency, and dealing with expected capital outflow. The bankers weren’t entirely convinced Okdah would remain in his post. His was – and remains – one of the many Mubarak-era positions at which revolutionary fingers pointed accusingly.
The CBE made some broader edicts but left the implementation and detail up to banks themselves. The meetings were well received and participants spoke well of Okdah’s calm. "We left the meeting more confident than we entered it," says one.
Khalid says Barclays was "literally the first bank to realize that this was something bigger than the usual protest". That was on January 27, two days after Tahrir Square began to fill. Barclays’ office is barely a rock’s throw from the square. It’s also next door to a key military barracks. Some 50 metres away is the US embassy. It’s a high-security area that, at that uncertain time, was no place to do any banking.
"We were the first bank to invoke a business continuity plan," says Khalid. In other words, closing the doors of its downtown headquarters and moving a skeleton staff to the less-frantic Nasr City, in Cairo’s well-heeled east. Closed by order of the central bank, Barclays reopened on February 6. Five days later, Mubarak fell. (Khalid’s team would later win an internal accolade from their London headquarters for their handling of the crisis.)
