New banking law stimulates merging, acquisition: Pharos

CAIRO – 29 May 2019: Pharos Holding said that the application of the item on increasing the minimum capital of commercial banks tenfold to LE 5 billion under the new banks law will prompt many banks to increase capital, except for the two international commercial banks and Qatar National Bank.

The investment bank added that banks that exceed the required minimum capital may be inclined to inject these retained earnings into the paid-up capital.

It added that other banks whose capital is well below the required limit may seek to merge, acquire or raise the capital of the Egyptian Gulf and the Suez Canal, but this will depend on the timing the law will come to force.

The new banking law draft stipulates raising the minimum capital of commercial banks to LE 5 billion from the current limit of LE 500 million, increasing it to $150 million for foreign banks, allocating no more than 1 percent of profits to the Development Fund for the Banking Sector, in addition to cancelling the maximum period of appointment of the heads of banks and members of the board of directors.