(Ecofin Agency) - Egypt Central Bank is planning to increase commercial banks’ minimum capital base from EGP500 million to EGP5 billion. This was disclosed in a draft bill on banking and financial institutions’ activities.
The capital base of foreign banks’ subsidiaries in the country should increase from $50 million to $150 million, according to the same draft bill. The concerned banks will have a 3-year deadline to comply with the new regulations.
The central bank indicates that the proposed bill is aimed at boosting the banks’ financial strength so that they can face potential risks and stand up against the competition in the region.
Only six banks have capital above the base set in the new bill. They are namely National Bank of Egypt, Banque Misr, Commercial International Bank, QNB Alahli, Arab African International Bank and Arab International Bank. Twenty-five local banks and four foreign banks’ subsidiaries have capital below the proposed new base.
In 2003, an increase of the base led to important mergers and acquisitions.