CAIRO: The Cabinet released Banque Du Caire’s balance sheet dated March 31, 2007, publicizing the bank’s declining monetary status amid controversy surrounding plans to privatize the bank.
According to the balance sheet, the debts of 14 bank clients have increased by LE 5 billion – comprising 63 percent of the amount of their total loans – during the past four years. The news was met with much surprise, especially because bank officials were aware of their clients declining credit status.
The bank’s loan portfolio shows a total of LE 28.7 billion, 73 percent of which are non-performing loans, the Cabinet said upon announcing that 80 percent of the bank will be sold.
The Cabinet recently unveiled plans to sell 80 percent of Banque du Caire in an auction and float another 15 percent on the stock exchange within a year. This decision had sparked a heated debate about the sudden decision, the reasons behind selling the bank, as well as fears of selling it to a foreign entity.
According to correspondence seen by Al-Masry Al-Youm between Banque Du Caire, the Central Bank of Egypt (CBE) and the Central Agency for Public Mobilization and Statistics (CAPMAS), the bank preferred to address their debt problems using “friendly means, ignoring CBE’s request to deal with the issue.
When questioned by CAPMAS about the “friendly settlements agreed upon with the loan clients, Banque Du Caire said that measures will be taken against them if they do not pay according to the settlement plan.
“The bank was obviously suffering and operations were not on a professional basis, a CBE official told the Daily News Egypt, “the decision to sell is the only thing that can be done to save the catastrophe we have reached.
According to the balance sheet, the bank’s deposits reached LE 38 billion, most of which are government deposits that will be transferred to Banque Misr. On the other hand, the bank’s reserves have reached LE 1315.9 million with net profits of LE 540 million that should increase by the end of the year, registering the highest profit in the bank’s history.
“This profit is not a real one, as the bank is still at loss due to the chaotic loan issue that prevails, the CBE official said.
It is worth mentioning that LE 20 million of the total loans are granted to Egyptians in Cairo and of the LE 38 million in deposits, LE 18 million belong to Egyptians.
Last week, Ahmed El-Baradei, former head of Banque Du Caire’s, statements to the press stirred controversy over the true reasons behind the government’s decision to privatize the 55-year-old state-owned bank.
El-Baradei claims that during his time at the bank, he had tried to deal with 46 “important businessmen regarding their loans that were worth over LE 25 billion that comprised 74 percent of the bank’s transactions.
Despite efforts to improve the bank’s performance and statements announcing that the bank’s financial results last year showed profits, the loan burdens still prevailed, leading experts to believe that the bank cannot continue on its own.
Banque Du Caire was slated to merge its operations with Banque Misr, but that would have added more pressure on Banque Misr’s balance sheet and cash flow. The government decided to privatize it instead.
According to the government, the main reasons behind the sale are lack of qualified banking experts, overstaffing, weak control and risk management, in addition to the well-known heavy non-performing loan burden.
The privatization of Banque Du Caire is expected to raise more than $1.6 billion
