Despite opinions that the maximum wage applied by the government will cause banking talent to flee from government-owned banks to privately-owned institutions, Basant Fahmy, financial adviser at Al Baraka Bank Egypt, believes that the public banking sector in Egypt is strong and boasts a stockpile of talent, which has not been granted the opportunities they deserve due to bank leaders serving long terms on boards of directors.
During an interview with Daily News Egypt, Fahmy requested that all banking leaders that requested to leave government banks describe their roles throughout the period of their work at the bank.
Why did leaders leave the public banking sector?
Of course, the imposition of a maximum wage by the president caused many to leave because they compare their wages to that of their counterparts in foreign banks in Europe and America.
We have to ask why they chose to leave at this time, as the issue isn’t just about wages. The state must develop a record of banking work for those employed in the sector.
Moreover, you can count the number of private banks in Egypt on one hand, and business rules vary from those of state-owned institutions. A large proportion of workers came from the private sector to the public sector and then moved back to private… Why? This question needs to be answered now, and everyone knows the answer.
They chose to leave, but they should not market themselves as though work in public banks will collapse, and in reality, this is a failure for them, even if they left.
On the topic of the second tier, do you think that training programmes within Egyptian banks are efficient at the moment?
The banking institution plays a large role in training bankers and is active, although banks must conduct training programmes for their employees by using competent training personnel, whether they be local or from international banks.
The country cannot be in such difficult economic circumstances and dole out this type of wage, and a decent country’s banking system should not depend so much on people.
Whoever wants to leave may leave, and even migrate to banks outside of Egypt, as this will only come to form a benefit for the Egyptian economy.
How do you feel about business regulations within the banking sector at the moment?
This is a difficult question, but there should be a code of conduct established by the Central Bank of Egypt that prevents employees from accepting gifts from clients. If the banking sector was managed according to strict rules, corruption would be eliminated.
The conflict of interest law should be applied to bankers so that the state preserves its rights to compete with the private sector. These rules are in place for prestigious banking systems across the world.
There has been disagreement among economists on increasing banks’ roles in financing government debt instruments, like bonds and treasury bills, in anticipation of higher interest rates that are not seen with investors borrowing, especially in light of the circumstances experienced by Egypt over the past four years.
The volume of deposits in the banking system is in excess of EGP 1.8tr, and approximately 50% is employed in government debt instruments.
But at the same time, when the state resorts to borrowing from banks, they crowd out the private sector in accessing credit.
On the other hand, the majority of those who purchase bonds and treasury bills are, in fact, public banks. The banks acquire interest and make profits, and ultimately, these profits go to the state.
What are some solutions for the USD exchange rate on the black market surpassing EGP 7.70?
The increase in the budget deficit put pressure on the pound, especially in light of the erosion of cash reserves. The World Bank team that visited Egypt in November emphasised the need to reconsider the exchange rate for the pound against foreign currencies in its notes.
But this will eat Egyptians’ savings, create a wave of price increases, and hurt poor Egyptians.
I know this, but it is better to start late than never. Continuation means the continuation of the value of the USD exchange rate. $1 is sold on the black market for EGP 8, and I fear that rates will continue to grow beyond this.
Reducing the exchange rate would mean great advantages for Egyptian exports abroad, as countries that succeeded in doing so achieved acceptable results during brief periods.
The state can raise interesting rates, as Turkey raised the interest rate to 120% when inflation reached 80% during the 90s.
This will encourage Egyptians to exchange their foreign currency to pounds in the hopes of gaining a higher interest rate.
