French Banks Sell Units In Egypt On Eurozone Crisis

As French financial institutions retrench from expansion abroad to face the eurozone crisis, two French banks have decided to sell their units in Egypt which are Societe Generale which had received a purchasing offer from Qatar National Bank to acquire 77% of its unit in Egypt and BNP Paribas Bank which is also in talks with a Qatari bank to acquire its unit in Egypt.

Mohamed Badra, member of board of directors of Banque Du Caire, said European banks lack capital adequacy after it applied Basel III regulations. Therefore, banks were obliged to sell their foreign investments in order to strengthen capital. Badra noted that the negotiations are preliminary as the due diligence process did not start yet and when it starts, it will last for three months. Afterwards, a purchasing offer will be submitted to the bank and the latter will decide whether it accepts the offer or not. Badra refereed to Piraeus Bank which rejects the two purchasing offers it received, after the due diligence process was conducted.

Qatari banks seek to acquire banks working in Egypt as they plan to expand their investments in the Egyptian market in the upcoming period after the Qatari prince visited Egypt, as most Arab Gulf banks have branches in Egypt, while Qatari banks did not have branches in Egypt. Qatar has strong liquidity which will enable it to acquire Societe Generale’s unit in Egypt.

National Societe Generale Bank-Egypt announced that Qatar National Bank offered to acquire Societe Generale’s stake in the bank amounting to 77.17%. The capital of NSGB-Egypt is EGP 4.4 billion divided on 443.5 million shares with a par value of EGP 10 per share. The listed investment funds and individual investors acquire stake of 22.8% in the bank.

NSGB, owned by France’s Societe Generale, acquired Misr International Bank in 2005 with EGP 1.6 billion before merging with the bank to be NSGB-Egypt.