Fifteen Arab banks are operating in the Egyptian market, in addition seven joint Egyptian-Arab banks, which are part of a total 38 banks operating in the Egyptian market, according to the supervisory board in the Central Bank of Egypt (CBE).
The National Bank of Abu Dhabi-Egypt (NBAD) is considered one of the oldest Arab banks operating in the Egyptian market, as its registration with the CBE dates back to 23 January 1975.
On the other hand, Morocco’s Attijariwafa Bank is one of the most recent Arab banks to enter the Egyptian market, after it acquired Barclays Bank Egypt in October 2016.
According to the list of registered banks at the CBE, the United Arab Emirates is represented by five banks in the Egyptian market. These banks are Emirates NBD, Union National Bank (UNB), National Bank of Abu Dhabi (NBAD), Abu Dhabi Islamic Bank (ADIB), and Mashreq Bank.
The list also stated that Bahrain is represented by three banks in the Egyptian market. These banks are Ahli United Bank, Al Baraka Bank, and Arab Banking Corporation Bank (ABC).
There are two Lebanese banks operating in the Egyptian market, which are Blom Bank Egypt and Bank Audi Egypt. There are also two Kuwaiti banks operating in Egypt, including the National Bank of Kuwait (NBK) and Ahli Bank of Kuwait (ABK). ABK acquired Piraeus Bank Egypt, but has not yet changed its trade name, according to the CBE’s list.
Other Arab banks operating in the Egyptian market include Arab Bank Jordan, QNB Al Ahli Bank, and Attijariwafa Bank.
In addition to these banks, there are seven joint Egyptian-Arab banks. Most of these banks were established according to private agreements, such as the Arab International Bank (AIB), which was established in 1974 according to a private agreement between Egypt, Libya, Oman, Qatar, and the United Arab Emirates.
This is besides the Arab Investment Bank established in 1978 between Egypt and the Federation of Arab Republics. However, the Egyptian national investment bank acquired most of this bank.
The Egyptian Gulf Bank (EGB) also operates in the Egyptian market, and was established in 1974 in joint cooperation between Egyptian and Gulf investors.
The Suez Canal Bank was established in 1978 between Egypt and Libya, and Faisal Islamic Bank of Egypt was established in 1979 according to an Egyptian-Bahraini-Saudi agreement.
In addition to these banks, there is the Arab African International Bank (AAIB), which was established in 1964 between Egypt and Kuwait, and is one of the largest banks operating in the Egyptian market.
Banking expert and board member of the Suez Canal and the Arab-Sudanese Bank Mohamed Abdel-Aal said that the presence of foreign banks, including Arab banks, in the Egyptian market has changed in recent years.
Abdel-Aal explained that some banks were established to implement joint economic and financial agreements between Egypt and other countries, or between Egypt and a group of countries, in order to facilitate international trade to finance intra-joint ventures and to serve investors requirements in Egypt. Examples of these banks are the Arab African International Bank (AAIB) and Arab International Bank.
There are other banks that were nationalised in Egypt and returned directly to its work after the political situation changed and the investment climate and legislation improved circumstances. Those banks started to re-open their old branches, even with new licences, relying on their old reputation before nationalisation and its customer base. An example of those banks is found in the Arab Bank, according to Abdel-Aal.
He added that some banks were established by a group of investors, individuals, or institutions, whom were attracted to the market by the promising investment climate in Egypt and the reduced average of the number of bank customers compared to the population. This made the banking business attractive in funding, loan activities, retail activities, or investment banking activities. An example of those banks is found in the CIB.
According to Abdel-Aal, some banks entered the Egyptian market after acquiring Egyptian banks that were sold. This is how most Arab and foreign banks entered the Egyptian market.
Egypt has benefited from Arab banks and branches of foreign banks operating in its market, said Abdel-Aal. The most important among these benefits are transferring modern banking expertise, risk management technology and international finance models, as well as training young cadres that have helped in the spread of these banks.
Arab and foreign banks operating in Egypt provided credit and financing limits that helped the Egyptian banking system to finance the rapid economic development processes. They also provided amounts of foreign exchange to a certain extent in previous years that contributed to the financing of foreign trade activities between Egypt and other countries. They pushed the government and Egyptian banks to improve their situation and develop their human structures so that they can compete, according to Abdel-Aal.
He added that foreign banks have their own risks, as they are controlled from their parent companies abroad and may face their own problems, which could lead to bankruptcy or withdrawal from global markets.
Abdel-Aal noticed that the foreign banks that stopped operating in Egypt were acquired by other Arab banks. One of these banks is Barclays, which was recently acquired by Attijariwafa Bank.
“As we know, foreign banks will not exist in Egypt or anywhere in the world before they are able to anticipate their profitability rates and calculate them in advance,” according to Abdel Aal.
He explained that there are many factors and reasons why Arab banks enter the Egyptian market. Some of the factors are the economic recession in Europe and America, and the high risk for Arab investments in those countries. This is along with the decrease of investment rates compared to savings rates in the Arab countries, which makes them look for external opportunities especially in the banking sector.
The emergence of new petroleum discoveries in Egypt’s Mediterranean coasts made Egypt an attractive station for foreign investments, especially in national projects and the Suez Canal Area Development Project, another advantage enjoyed by Egypt that attracts banks, according to Abdel-Aal.
He added that the main reason that causes Arab banks join the Egyptian market is its population. The Egyptian population has now reached about 90 million people and is expected to reach 118 million in 2030, then 162 million in 2050. We know that only 10% to 18% of the population is currently using the banking system, which explains the enormous future marketing opportunities that await the banking system in Egypt and will allow it to expand and grow.
On the other hand, according to Abdel-Aal, banking density is very high in Egypt compared to their counterparts in other countries. In other countries, almost every million set of citizens are served through 200 bank branches. In Egypt, every million people are served by only 40 bank branches. This reflects the size of the gap that must be filled by spreading existing banks or establishing new banks, which confirms the feasibility of foreign banks seeking to work in the Egyptian market.