CBE Exempts Four Banks From Applying Basel II Standards
The Central Bank of Egypt (CBE) announced that four banks working in the country would be exempt from having to adopt the Basel 2 Standards that were otherwise supposed to have been enacted by all banks by the end of the current fiscal year, stated a CBE official.
The exempt banks are Banque Misr, the Principal Bank for Development and Agricultural Credit, the Industrial Development and Worker’s Bank, and the Egyptian Arab Land Bank.
Two of these banks, the Egyptian Arab Land Bank and the Principal Bank for Development and Agricultural Credit, have suffered rising debt insolvency and appropriation voids, with the latter is also experiencing financial and structural problems with regards to its liquidity rates, monetary solvency issues, disclosure and governance practices in addition to old technological infrastructure.
Most banks were ready to adopt the Basel 2 Standards and apply them to their financial and technological infrastructure, in addition to clarifying their statistical reports. This was especially true for foreign banks working in Egypt that receive aid from the central banks of their home countries. Applying the Basel 2 Standards to the Egyptian banking sector has long been considered a pivotal step of the Banking Reform Programme, undertook by the CBE in 2009. It plans to create a regulatory framework that has the ability to assess risk and guarantee the stability of the Egyptian Banking sector while operating with greater efficiency in addressing these risks and staying up to date with international banking standards. This is an attempt to strengthen competition amongst Egypt’s banks.
The official suggested that the CBE would allow all Egyptian banks, whose fiscal year ended in December, to undergo a trial period, where they could test the application of the Basel 2 Standards and present their results to the Central Bank in January and February of 2013. These findings would then serve as a foundation for the actual application of the Basel Standards the following month in March.
However after careful review, the CBE found that the above four listed corporations would have additional problems applying the Basel 2 Standards to their company infrastructure. They would therefore be granted anywhere from 3 months to one year to address any internal shortcomings they may have before being asked to re-apply the Basil 2 Standards, with each company’s allotted time being determined by the severity of the problems faced.
Daily News Egypt
