Misr, Caire set for merger

07 October 2005
Prime Minister Ahmed Nazif on 24 September announced that the government had decided to merge state-owned Banque Misrand Banque du Caire. The merger of the country's second and third largest banks in terms of assets will effectively create the country's largest bank ahead of National Bank of Egypt (NBE).

The banks' combined assets will be about £E 135,000 million ($23,600 million). No timeframe for the merger has been given. The move is part of a government initiative to restructure and consolidate the local banking sector.

However, the announcement to merge the two giant state-owned banks has raised eyebrows. Analysts have pointed out that both banks are undercapitalised, suffer from a high number of non-performing loans, inefficiencies, poor asset quality and overstaffing. 'It is not clear why the government would take such a step now,' says Ahmed el-Ashram, financial analyst at the local HC Brokerage. 'The odds of privatisation are lower now as it will take a longer time.'

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