Purges set banks on new course
The removal of old-guard managers from Egypt's state banks, proposals to clean up NPLs and new capital rules are shaping up the banks for a sell-off.
SENIOR BANK EXECUTIVES and leading businessmen were purged in a series of arrests in Egypt earlier this year. Some have faced trial and even imprisonment with hard labour after allegations of financial wrongdoing. It's a startling approach to reforming the country's financial sector.
Falling growth rates, ever more non-performing loans and a series of high-profile scandals have taken their toll on Egyptian banking. But for years little progress was made towards addressing these issues. Now the Egyptian government has begun to take decisive action. And though this is shocking, bankers are feeling optimistic.
The government began its reform efforts with a serious assault on corruption at the start of the year and most recently with its muddled attempt to allow the Egyptian pound to float freely [see Draconian measures follow dirty float, this issue]. Following a mysterious IMF report that was never made public, over 30 top bankers, businessmen, government officials and lawmakers were arrested for alleged involvement in illegal financial transactions.
Among those taken into custody and facing investigation are the heads of two of the country's leading banks: Muhammad Abu Al-Fath, the former managing director of Banque du Caire, and the former head of Misr Exterior Bank, Abdullah Tayel.