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Egypt’s Banque du Caire eyes lending boost

Bank seeks to boost lending ratio to 55 pct.

October 12, 2010 1:49 by

Banque du Caire, Egypt’s fifth-biggest bank by assets, aims to boost its lending ratio in three years to match Egypt’s average after nearly doubling it since 2008, a bank official told Reuters. In the two years since an aborted sale of the state-owned bank, it has increased its loan-to-deposit ratio to 30 percent from 17 percent. But that is still well below the 55 percent Egyptian banking sector average.

Managing Director Basel El Hini said in an interview that boosting lending was part of a broader restructuring effort, although he said it was up to the government to decide whether to put Banque du Caire up for sale again.

The bank is putting the final touches to a plan to bring its operating performance up to market averages in two to three years, part of which includes increasing the lending ratio.

“Seeing that we started at rock bottom, getting there in two or three years time will be an uphill struggle,” Hini said in the interview on Sunday. He said the bank’s lending ratio target should be achieved in three years.

“The leap was in corporate loans because we were a very, very small provider of corporate loans,” he said. “We were not considered one of the players.”

Hini is part of a management team brought in after the government failed to find a buyer for its 67 percent stake.

As part of the planned privatisation, the government transferred the bank’s 20 billion Egyptian pound ($3.5 billion) bad loan portfolio to state-owned Banque Misr.

This left behind a loan portfolio of just 8.94 billion pounds, which allowed the bank to start off with a clean slate just as the world’s economy was falling into crisis.

Egypt’s economic growth slowed to a still vibrant 4.7 percent in 2008/09 during the crisis before speeding up to 5.3 percent the following year, leaving space for Banque du Caire to expand lending.

Hini, who is in charge of corporate and retail credit, said most of the bank’s lending growth was to blue-chip companies, with some emphasis on syndications to avoid risk.

The business plan also includes a push into small corporate lending and a project to spin off the bank’s 400 million pound micro-finance business into a separate company, Hini said.

The spin-off is awaiting a new law governing micro-finance to work its way through parliament, said Hini. (Editing by Michael Shields)

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