Following the conclusion of the agreement, Cairo Barclays will become the only wholly-owned subsidiary of a foreign bank operating in Egypt. Barclays is understood to be planning to expand its retail operations, with the addition of five new branches before the end of the year and the planned launch of credit card services in May. The parent company is also understood to be considering further acquisitions at a later date.

The central bank announced last year that it planned to publish in October a list of all the government's holdings in joint venture banks that would headline the government's privatisation programme for 2003/04.

This list has yet to materialise, but could include minority government stakes in Commercial International Bank(CIB), Egyptian American Bank (EAB)and National Societe Generale Bank (NSGB).

Bankers say that foreign investor interest in the local banking sector has been strengthened by the strong performances of most major commercial institutions in 2003. A number of banks are in the process of restructuring their core businesses, following a difficult period in which provisioning for non-performing loans and the devaluation of the local currency affected many balance sheets. Banking sources say Cairo Barclays is expected to show a record profit when it publishes its 2003 results at the end of March, partly due to major gains on foreign currency transactions in the first half of the year (MEED 28:11:03).

NSGB is also pushing ahead with expansion plans, and is expected to propose a £E 1,000 million ($161 million), 10-year non-convertible bond issue at its annual general meeting on 17 March. The bank posted a 22 per cent increase in net income to £E 201.9 million ($33 million) in 2003, with strong growth at the operating level reflected by a 43 per cent increase in net interest income to £E 329.1 million ($53 million).

Income was boosted by the growth of the bank's loan portfolio, but an ongoing programme to expand the NSGB branch network led to a 38 per cent increase in overhead expenses to £E 146.5 million ($24 million).

Another bank to benefit from the liberalisation of the financial sector is EAB, which is setting up the country's first private sector mortgage company. The bank saw net profits increase to £E 102.5 million ($16.5 million) in 2003, compared with £E 50 million ($8 million) the previous year. The bank has yet to release its full results, but the headline figures are likely to reflect a strengthening in loan-loss provision reserves. EAB has undergone a strategic restructuring programme following a period of uncertainty during its unsuccessful attempt to find a strategic partner (MEED 30:1:04).

Anticipating heightened interest from foreign investors in 2004, Egypt's biggest commercial joint venture bank, CIB, has applied for an American Depository Receipt (ADR) Level-I listing and plans to start associated trading later in the year. The bank is also in the process of listing on the Kuwait and Abu Dhabi stock exchanges, and has plans to set up a representative office in Dubai. CIB's financial results for 2003 show a modest 8.3 per cent increase in net profits to £E 412.6 million ($67 million) for the year, with bottom line growth spurred by a 14.1 per cent increase in net interest income to £E 578.8 million ($93 million).