'This is clearly an attempt to consolidate a fragmented system,' says an international banker based in Cairo. 'Their eventual stated aim is to reduce the 62 banks down to 21, but more immediately, and more importantly, they have set 30 June 2005 as the final date for banks to meet capital adequacy targets. Originally they provided for three one-year extensions, and now the first deadline has passed they really want to push this through.'

The main provisions of the masterplan include:

The merger of the six smallest commercial banks with larger institutions by October 2004. The central bank in September approved the merger of Misr Exterior Bank with state-owned Banque Misr, making it the first of the six state-affiliated banks to be folded back into their parent companies. The other five banks slated for merger are Commerce & Development Bank, El-Mohandes, Islamic International Bank for Investment, Nile Bank and United Bank of Egypt.

Reinforcing the regulatory powers of the central bank, including establishing a central arbitration committee to adjudicate banks' non-performing loan (NPL) cases.

The sale of minority stakes in a number of local banks, including Misr International Bank (MIBank), in which Banque Misr has a stake, Commercial International Bank (CIB) and EAB.

Financial and organisational restructuring of the four state banks over a three-to-four-year timeframe.