Is AlexBank CEO’s Strategy Threatening Egypt-Italy Ties?

Roberto Vercelli, CEO of AlexBank, is asserting again that his recent cynical remarks about not contributing to ‘Long Live Egypt’ fund, were not ‘a slip of tongue’.

Two weeks earlier, Vercelli showed his uncertainty towards the fund, saying how the bank could donate without having any basic information about who would run the fund, and how donations would be spent.

AlexBank, a member of Intesa Sanpaolo Group, has already granted the Federation of Egyptian Banks 2% of its current year’s profits which is equivalent to EGP 13 million for combating the slums phenomena in Egypt under the initiative of Federation of Egyptian Banks, he noted.

This fund was originally initiated by Egypt’s President Abdel Fattah al-Sisi to support and revive cash-strapped national economy.

The asserting recent remarks came following a vital visit paid by the Italian Prime Minister Matteo Renzi earlier this week to Cairo to bolster deeply-rooted bilateral ties between the two countries, meeting with Egypt’s President Abdel Fattah al-Sisi and Prime Minister Ibrahim Mahlab.

The Egyptian president Sisi told reporters at a joint press conference he held with visiting Italy’s Prime Minister Renzi at the presidential palace on Saturday that “Italy is Egypt’s first European trade partner.”

He noted that the volume of trade exchange between Egypt and Italy is something close to six billion dollars.

“Italy is Egypt’s second trade partner worldwide and the fifth in terms of investments in Egypt, said President Sisi.

So, is Vercelli swimming against the tide? Can his sceptical attitude against the fund, harm the revived Italy-Egypt ties?

Vercelli’s remarks have aroused major controversy among the mainstream media in Egypt over the last few days. One of the local newspapers in Egypt (Al-Wafd) has described Vercelli’s remarks as ‘frankly’ conveying  the bank’s mistrust in the Egyptian government, the fund and the transparency of putting donations in the right place.

The newspaper defended the bank’s no confidence in the government, since Egypt had easily given up such a big bank like Bank of Alexandria to the Italian Intesa Sanpaolo Group, through a deal worth very humble amounts of cash.

AlexBank is not as naive as other banks working in the Egyptian market, to finance strategic projects and support the national economy, in return for very modest profit margins, the newspaper elaborated.

In contrary, seeking more guaranteed profitability, AlexBank is currently going for retail lending, auto loans and visa cards, in addition to other banking transactions other than funding big national projects.

Elsewhere, in his most recent statements, Vercelli revealed AlexBank’s strategic plan for 2014 as being based on multiplying funds for SMEs and offering more facilities to entrepreneurs with innovative projects that have the potential to achieve real development.

The Italian banking official seems he has omitted the fact that retail loans seize over 50% of AlexBank’s credit portfolio.

In 2011, earlier statements by parent company Intesa Sanpaolo Group’s leaderships had referred to pledges to pump around €500 million (over EGP4.2 billion according to the EGP’s exchange rate during that time) in forthcoming infrastructure projects in Egypt. Such pledges were in vain and no announcements about financing infrastructure projects in Egypt have been made up till now.

Intesa Sanpaolo Group holds major shareholder in the Bank of Alexandria amounting to 70.25% of the bank shares since 2006. The International Finance Corporation (IFC) has 9.75% of the bank’s share; whereas the Egyptian Government holds 20%.