Interview by Naser Youssef and Ayat el-Battawy
Abdel Megeed Mohey El-Din, the Vice President of the Egyptian Arab Land Bank (EALB), stated that the bank is currently deciding contemplating two scenarios to manage the physical assets obtained via settlements with clients unable to meet their financial obligations. The value of the assets is EGP 2.4bn.
The first scenario, he stated, is that the bank establishes a company to develop and manage the assets, while the second scenario calls for a subsidiary of the bank to implement the management plan. Abdel Megeed said that EALB owns a number of subsidiary companies and that in the case of the second scenario the bank will restructure one of them to successfully manage the new capital injection. The
subsidiary will then hire new employees qualified to manage the capital, as no EALB subsidiaries are
currently qualified to handle the new assets.
According to the Vice President of the Board of Directors, the bank was able to obtain EGP 750m worth of debts from delinquent clients during the current financial year. The bank hopes that the amount obtained from settlements will not be less than the current numbers in the coming fiscal year. He said that the current credit portfolio is approximately EGP 12bn while deposits stand at EGP 15bn. He added that it is hoped that both the credit portfolio and deposits will increase by EGP 1.5bn by the end of the next fiscal year in June, 2013 to reach EGP 13.5bn and EGP 16.5bn respectively.
Abdel Mageed said that loans to individuals currently equal EGP 2bn with EGP 200m for mortgages while the rest of the EGP 12bn is for companies. He said that the bank is currently setting up a new investment fund with EGP 50m in capital to be managed by the Alpha Company for Investment Fund Management. The Company will invest in fixed income instruments.
The new company has already received the approval of the Central Bank and is currently waiting the approval of the Egyptian Financial Supervisory Authority. The new company is expected to begin its work this year and is part of a plan to diversify EALB’s holdings, as it currently does not own an investment fund.
On the issue of the Bank of Egypt’s and EALB’s equity in the King David Hotel, Abdel Megeed said that the issue is currently being considered by the Supreme Court of Israel. The two banks are demanding the return of their equity purchased in the King David Hotel 63 years ago which equals approximately $450 m. He said that the issue was not a simple one and that Israel is reluctant to recognize the claims of the two banks, especially given the current political situation which could influence the case. The two banks
are closely following the legal process to recover their assets. He added that the bank is currently injecting capital into a number of sectors, and that it plans to contribute EGP 300m to the Hyde Park loan which is managed by the National Bank of Egypt. The total value of the loan is approximately EGP 1.2bn. The bank also requested to participate in a $444m loan arranged for the Egyptian Chemical Industries Company (KIMA) which will rely on the financing for two projects in the Aswan Governorate to produce ammonium and urea.
Abdel Mageed said that the EALB’s capital currently equals EGP 3bn and that no plan exists to increase it. He added that the bank receives support from the Central Bank and that it received a loan of EGP 1bn in August, 2011. He also said that, in his opinion, the market is not in need of any more enterprises working in the field of Islamic Banking and that the companies currently offering such services are meeting the demands of Egyptian customers. He added that EALB will concentrate on the traditional banking sector in the future as it is still witnessing an increase in demand.
Abdel Mageed revealed that EALB increased its investments in government treasury bills, which currently equal EGP 1.6bn. He said that the bank based its decision on its prediction of surplus in liquidity and the rate of return on government debt
