EAB boosts profits ahead of Standard Chartered sale talks

23 November 2001

Negotiations about the sale of Egyptian American Bank (EAB)to London-based Standard Chartered Bankwere said to be approaching the final stages as the Cairo financial market prepared for the Eid al-Fitr break on 16-18 December. It is understood that intensive discussions have been held between the parties involved since the 26 November announcement by the Cairo & Alexandria Stock Exchanges (CASE) that the negotiations, broken off in July, had restarted (MEED 7:12:01).

EAB has published its results for the first three quarters of 2001, showing a modest increase in net profits and robust growth in the balance sheet. Earnings rose by 2.6 per cent year-on-year to £E 55.3 million ($13 million). Total assets at the end of September were £E 6,833 million ($1,608 million), 8.7 per cent higher than at the start of the year. Net interest income fell slightly, reflecting a 9 per cent contraction in the loan portfolio, but this was offset by a healthy increase in earnings from fees, commissions and foreign exchange transactions. Provisions rose by a relatively modest 4.7 per cent to £E 70.7 million ($17 million).

American Express Bankand Bank of Alexandriacontrol some 75 per cent of EAB's equity. The two partners decided to offer up their stakes for sale at the start of the year. Several bids were submitted, with Standard Chartered said to have quoted the highest price. EAB's share price has ranged between £E 30-63 ($7-14.80) over the past 12 months, as rumours of an imminent sale of the bank to Standard Chartered have ebbed and flowed. Since the latest CASE announcement, the price has risen steadily, reaching £E 53 ($12.50) in the run-up to Eid. The bank has 14.4 million shares.

The price offered by Standard Chartered has not been disclosed. However, analysts say they estimate the offer to be about £E 70 ($16.40) a share, which would give the bank a market value of £E 1,008 million ($237 million). From the perspective of a foreign buyer, the price has fallen significantly over the past 12 months on account of the devaluation of the Egyptian pound.

Standard Chartered on 29 November announced a change in its leadership, with Mervyn Davies coming from the bank's Hong Kong office to take on the post of group chief executive. He replaced Rana Talwar.

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