The Central Bank of Egypt (CBE) decided to pump EGP 2.5bn into United Bank, bringing the bank’s capital up to EGP 3.5bn. The CBE owns 99.9% of the bank’s shares.
According to Ashraf Elkady, chairperson of the United Bank, the CBE’s injection of new capital will give a strong boost to the bank and its team to develop its business, strengthen the capital base, and raise the capital adequacy.
Elkady added that increasing the capital base of banks is one of the most important challenges that Egyptian banks face, in light of the important and necessary economic reform policies taken by the Egyptian state in the current period.
This increase in the bank’s capital aims to meet the growing requests to expand in business and finance, whether directly or indirectly. It also targets a strategic expansion for the bank, establishing new branches and providing new products and competitive services in the market. This is in addition to developing a plan to expand financial inclusion, and to strengthen the infrastructure and banking technologies, according to Elkady.
He added that this decision also aims to increase the market share of the bank and avoid risks, as well as maximise its value as a prelude to offering the bank up for sale during 2017.
The United Bank aims to be a partner in sustainable Egyptian development plans, and to be the first choice for customers in various governorates to meet their financial and banking needs by clever and distinct products. The bank also aims to attract new customers by offering a diverse range of traditional and compliant financial solutions according to the provisions of Islamic Sharia in the long- or medium-term, Elkady said.
He explained that the decision to increase the bank’s capital is part of the CBE’s policy to provide unconventional solutions to create strong professional banks with the capability to face risks, and to encourage bank mergers.
Egypt at this important stage of economic construction needs strong banking entities to improve financial inclusion rates and to achieve targeted profitability, he explained.
He pointed out that the Egyptian banking sector is strong and attracts local and international investments, as its indicators of profitability are excellent and attractive.
The capital of the United Bank was EGP 1bn at the beginning of its acquisition of the Nile Bank, the United Bank of Egypt, and the Islamic Bank for Development and Investment in mid-2006.
He added that with the support of the CBE, the bank’s employees have been able to bear the responsibility and manage an integrated system that includes restructuring and dealing with defaulting files. The bank transformed from three weak entities to a bank that achieves profits based on a specific vision and an effective strategy.
The bank has been able to achieve growth rates and profitability by the end of 2016 that are considered the highest since its launch, according to the initial budget of the bank, which is not fully disclosed yet.