CIB waiting for CBE audit report after chairperson’s resignation

The Commercial International Bank – Egypt (CIB) is anticipating an audit report by the Central Bank of Egypt (CBE), which is set to be completed on Wednesday afternoon.

In the wake of the sudden stepping down of the bank’s outgoing Chairperson, Hisham Ezz Al-Arab, on allegations of violations; CIB’s new Chairperson Sherif Sami’s requested the report to be prepared.

The CIB management stated that it is willing to share all findings outlined in the report, when it is received, subject to the CBE’s approval, according to Daily New Egypt website.

The bank has already worked on what the CBE has previously referred to as compliance issues, since the latter started its audit process on the CIB in November and December 2019.

Some of this work saw changes to the bank’s head of compliance, and the department’s structure, as well as the addition of its international anti-money laundering and anti-terrorism units. While there might still be weaknesses at the bank, they are by no means disastrous.

On the back of Ezz Al-Arab’s resignation, the bank may well put into effect a plan to increase investments in the bank’s audit, compliance and internal control teams, according to Pharos Research.

These areas also require constant investment as they are always constantly changing with new money laundering regulations and IT system security methods. 

Pharos Research views the plan as two pronged, with the first part entailing a market reassurance that CIB will continue the work that outgoing Chairperson has set the ground for. This would be on the basis that the bank is an institution, rather than a one-man show, and most of its management has not changed.

Two audit firms will investigate the report as soon as it is received, and look into any possible allegations of financial fraud. If the points highlighted in the report are about compliance and regulatory issues, then they will be treated in different ways. 

Although the bank is keen to undertake a share buy-back, it is illegal for banks to do so in Egypt.

Pharos Research also noted that over the last three or four months, at least two chairpersons at banks working in the Egyptian market have been removed from their roles. This entails that Ezz Al-Arab’s stepping down is not an isolated incident – it only had the most impact because other banks had no foreign investments nor were they listed so they went unnoticed.

Pharos Research has pointed out that CIB’s Non-Executive Chairperson Sherif Samy has previously worked in regulatory affairs. With previous experience as the head of Egypt’s Financial Regulatory Authority (FRA), Samy is a great addition to the bank and adds another dimension.

This is due to the fact that the Chairperson role not only means heading the Board of Governors, but also means heading the audit, compliance, legal, and risk committees.