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Egypt raises minimum capital requirement for banks tenfold to 5B Egyptian pounds

Egypt's new banking law will raise the minimum capital requirement for banks to 5 billion Egyptian pounds from the current 500 million Egyptian pounds and the buffer for branches of foreign banks to $150 million from $50 million, Daily News Egypt reported May 26.

Only six out of the 33 banks and five foreign bank branches that operate in the country are currently in compliance with the new law. The remaining entities have a three-year grace period to comply, the report said.

The banks already in compliance are National Bank of Egypt (SAE), Banque Misr (SAE), Commercial International Bank (Egypt) SAE, Arab African International Bank (Egyptian JSC), QNB ALAHLI SAE and Arab International Bank.

The banks that need to raise their capital buffers are Banque du Caire SAE, MISR Iran Development Bank, Bank of Alexandria SAE, Arab Banking Corp. - Egypt (SAE), Housing & Development Bank - Egypt (S.A.E), Suez Canal Bank (SAE), Industrial Development Bank, Abu Dhabi Islamic Bank - Egypt (SAE), Al Baraka Bank Egypt (SAE), BLOM Bank Egypt SAE, Bank Audi (SAE), Ahli United Bank (Egypt) SAE, HSBC Bank Egypt SAE, Attijariwafa bank Egypt SAE, Credit Agricole - Egypt Bank (SAE), Emirates National Bank of Dubai SAE, Union National Bank - Egypt (SAE), Egyptian Gulf Bank (SAE), Export Development Bank of Egypt (SAE), Faisal Islamic Bank of Egypt (SAE), Société Arabe Internationale de Banque SAE, Arab Investment Bank, Al Ahli Bank of Kuwait - Egypt SAE, National Bank of Kuwait - Egypt (SAE) and The United Bank of Egypt, according to the report.

The Agricultural Bank of Egypt and Egyptian Arab Land Bank are also included in the noncompliant list since they are not designated as specialized banks and will have to increase their capital base once they've completed their restructuring, the report said.

Mashreqbank PSC, First Abu Dhabi Bank PJSC, Citigroup Inc. and National Bank of Greece SA are the foreign banks with branches in the country that must raise their capital base. However, National Bank of Greece is selling its assets to Lebanon-based Bank Audi SAL's Egyptian unit and will not be subject to the new requirements, according to the report.

Tier 2 banks, such as lenders that focus on particular types of small and medium-sized enterprise financing and digital banks, are exempt from the minimum capital increase, the newspaper reported.

As of May 24, US$1 was equivalent to 16.87 Egyptian pounds.