CAIRO: Opposition parties from the Wafd, Tagammu and the nascent Democratic Front have joined forces in condemning the possible sale of Egypt’s third largest bank by spearheading a major opposition campaign.
The controversial decision to privatize Banque Du Caire (BDC) by selling 80 percent of its shares through auction, and floating an additional 15 percent of shares was announced by cabinet nearly a month ago.
Cabinet said it would seek a strategic investor, raising suspicions that the BDC would be sold to a foreign entity that could afford the hefty LE 12-15 billion estimated sale value.
Wafd party President, Mahmoud Abaza has been touring the coastal town of Port Said to gather signatures for a petition expressing opposition to the sale and suggesting that the bank’s shares go public on the Cairo Alexandria Stock Exchange (Case) for Egyptians to purchase.
Some voices within the National Democratic Party’s (NDP) Economic Committee, like Mustafa El Saeed have also expressed concern about selling the bank to a foreign investor, which he told Daily News Egypt “may not be in the best interest of the nation.
“If Banque Du Cairo is sold to a foreign entity, then about 35 percent of Egypt’s financial sector will not be in Egyptian hands, El Saeed said.
The BDC is believed to have a four percent share of overall deposits in the Egyptian market.
El Saeed also finds the idea unsettling because the developmental role of the bank will diminish under foreign management, which will understandably be more committed to profit, rather than the country’s developmental needs.
“I think that this decision to privatize makes one question previous decisions to merge Banque Du Cairo with Banque Misr or the decision after that for the former to acquire the latter, El Saeed said.
There were even logistical problems within the acquisition itself, he said. In many instances branches of each bank would be physically next to one another. A single bank providing a set basket of services with two branches within the same proximity prevents it from utilizing its geographic potential, or maximizing its service penetration.
According to Mohamed Barakat, President of Banque Misr, the BDC is 100 percent owned by Banque Misr, which has sought the help of an international financial advisor to facilitate the valuation process over the coming days.
Barakat also said that Banque Misr has channeled the BDC’s non-performing loans into its own portfolio through its technical support unit, allowing the BDC to start with a clean slate.
Barakat also defended the prospective sale saying that it would provide a much needed LE 9 billion to the national budget, which would be channeled into the financial restructuring of 40 public sector companies.
BDC has had its share of troubles for a number of years now, from a huge non-performing loan portfolio, to scandalous corruption cases where businessmen were given loans without sufficient collateral.
“History has taught us that economic independence is an inseparable part of our national security, said Wafd party Secretary General Mounir Fakhry Abdel Nour, who is part of the campaign against the sale.
Abdel Nour sited the BDC’s historic role in financing the cotton crop in 1956, when British and French banks halted loaning in retaliation to the nationalization of the Suez Canal. The latest proposal has been seen as a failure on the part of the Egyptian government to either merge the ailing bank with the more financially buoyant Banque Misr, or even make good on its decision to have Banque Misr acquire BDC.
“Floating the bank’s shares and allowing the average Egyptian to be a stake holder in the bank’s future will placate people’s distrust of privatization, Abdel Nour said.
Despite Abdel Nour’s position against the sale he continues to support privatization in other sectors.
Abdel Nour considers the argument that a foreign investor is more beneficial due to the provision of technical know how, to be a belittlement of Egyptian talent.
“There are hundreds of experienced, competent, Egyptians in the finance sector around the world, doing their jobs successfully. This lack of trust on the part of our government in the Egyptian people’s ability to produce and innovate and exercise freedom has become unbearable, Abdel Nour said.
Egyptian economist and Vice President of the Democratic Front Party, Hazem Biblawy is also against the sale because he feels that privatization in Egypt is not implemented properly.
“A market economy is not just built around the concept of privatization. Prerequisites to a market economy include the rule of law, complete transparency and accountability. Without these three cornerstones privatization may transform itself into corruption where cartels exist. And this has happened in other parts of the world, a good example would be Russia, Biblawy told Daily News Egypt.