Identifier
Created
Classification
Origin
05CAIRO9583
2005-12-29 16:49:00
CONFIDENTIAL
Embassy Cairo
Cable title:  

STATUS OF EGYPTIAN BANK PRIVATIZATION

Tags:  ECON EFIN EAID EG 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L CAIRO 009583 

SIPDIS

STATE FOR NEA/ELA, NEA/RA AND EB/IDF
USAID FOR ANE/MEA MCCLOUD AND CHAN
USTR FOR SAUMS
TREASURY FOR MILLS/NUGENT/WALKER/KLINGENSMITH/PETERS
COMMERCE FOR 4520/ITA/ANESA/TALAAT

E.O. 12958: DECL: 12/29/2015
TAGS: ECON EFIN EAID EG
SUBJECT: STATUS OF EGYPTIAN BANK PRIVATIZATION


Classified by Charge Stuart Jones for reasons 1.4 (b) and (d).

C O N F I D E N T I A L CAIRO 009583

SIPDIS

STATE FOR NEA/ELA, NEA/RA AND EB/IDF
USAID FOR ANE/MEA MCCLOUD AND CHAN
USTR FOR SAUMS
TREASURY FOR MILLS/NUGENT/WALKER/KLINGENSMITH/PETERS
COMMERCE FOR 4520/ITA/ANESA/TALAAT

E.O. 12958: DECL: 12/29/2015
TAGS: ECON EFIN EAID EG
SUBJECT: STATUS OF EGYPTIAN BANK PRIVATIZATION


Classified by Charge Stuart Jones for reasons 1.4 (b) and (d).


1. (C) An early December discussion between the Ambassador
and Egyptian Central Bank Governor Farouk El Okdah focused on
the USG-GOE Financial Sector MOU, specifically benchmarks for
item three of the MOU, i.e., divestment of GOE shares in the
four largest joint venture (JV) banks by 6/30/05 and
privatization of the candidate state-owned bank by 12/31/05.
$100 million DSP funds are tied to divestment of GOE shares
in the JV banks and $150 million in DSP funds are tied to
privatization of the candidate bank, the Bank of Alexandria
(BOA).


2. (C) El Okdah noted that the GOE had already divested its
shares in four JV banks and would sell its shares in three
additional JV banks by the end of the year. (Note: Only two
of the four banks divested, National Societe Generale Bank
and Misr International Bank, contribute to achievement of the
benchmark. The GOE has yet to divest its shares in the two
other largest JV banks, Commercial International Bank and
Egyptian-American Bank. End note.) On the issue of
privatization of BOA, El Okdah stated that although the GOE
would not meet the end-2005 target, audit of BOA has been
finished and the bank would be on the market soon. He was
confident the bank would be sold by the end of the first
quarter of CY2006. He expected BOA would be purchased by a
single strategic investor, but said that the GOE might sell a
majority stake to a strategic investor and float the
remainder in an IPO on the stockmarket.


3. (C) Regarding disbursement of DSP funds, El Okdah said he
would like to package a number of benchmarks together for a
single substantial disbursement of funds, rather than take
disbursements piecemeal. He estimated the GOE would be in a
position to ask for $200-400 million in DSP by February 2006.
(Note: El Okdah did not mention what other benchmarks he
believed would be completed by February 2006. End note.)
The Ambassador suggested it would be useful for El Okdah
himself to travel to Washington to lay out what had been
accomplished. El Okdah replied that if the GOE met the
benchmark on BOA privatization by February 2006, he would
plan to travel to Washington at that time. Otherwise, he
would be in Washington in early April for the spring World
Bank/IMF meetings.


4. (C) Others' estimates for the BOA privatization are more
conservative. Working level contacts at the Ministry of
Finance predict the GOE will be in a position to seek $375
million in DSP, including disbursement of funds tied to BOA
privatization, by June 2006. In a late-December conference
sponsored by the AmCham Banking Committee, BOA Chair Mahmoud
Abdel Latif stated that BOA's restructuring was complete and
the bank would be put on the market in January. He predicted
that due diligence, negotiation and closing of the sale would
be concluded by June.


5. (C) Comment: Although none of these predictions would
meet the MOU target date, privatization within a few months
of the target date would be a major accomplishment for the
GOE, given the complexity of the task. End comment.

JONES