CAIRO (Reuters) -EFG Hermes Holding, Egypt’s biggest investment bank, will acquire 51% of state-owned Arab Investment Bank (AIB), the Cabinet said in a statement on Wednesday, in the first bank privatisation in more than a decade.
The Sovereign Fund of Egypt will also acquire a 25% stake in AIB, while the current owner, state-owned National Investment Bank (NIB), will retain 24%, the cabinet said after approving the acquisition.
AIB’s capital will be increased to five billion Egyptian pounds ($319.90 million), it added.
NIB was established in 1980 to finance government projects. Egypt last year told the International Monetary Fund it would restructure the NIB’s balance sheet through sales and swaps of assets, land or shares in public companies to settle overdue debts.
The government began a programme of selling its stakes in banks in 2004, and in 2006 sold most of its fourth largest bank, Bank of Alexandria, to the Italian banking group Intesa Sanpaolo S.p.A.
The central bank has said it plans to sell stakes in several state banks, including Banque du Caire, Egypt’s third-largest state bank, but plans were put on hold because of the COVID-19 pandemic.
The government has repeatedly postponed promised offerings of other state companies.
“The AIB transaction signals an improved capacity by the government to follow through on privatisation plans after a patchy track record, which is largely down to the establishment of the Sovereign Fund,” said Goldman Sachs economist Farouk Soussa.
In 2016 the government said it would sell stakes in a number of companies by the end of that year, but only sold 4.5% of one company, tobacco monopoly Eastern Company.
In 2018 it listed an initial batch of 23 state-controlled companies to be brought to market, but these were delayed by troubles in emerging markets followed by the pandemic.
The military has yet to complete the sale of two of its companies promised for the first quarter of this year.
($1 = 15.6300 Egyptian pounds)
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