Crédit Agricole, the French bank, on Thursday agreed to buy a controlling stake in Egyptian American Bank, a Cairo-listed bank, to expand in Egypt’s fast-growing economy and prepare for liberalisation of its state-dominated banking system.
The deal, valuing Egyptian American Bank at E£2.9bn ($505m), is the latest acquisition of a small private bank in Egypt by a big foreign group, reflecting the region’s booming economy amid high oil prices, rising liquidity and stock markets overflowing with petrodollars.
It is Crédit Agricole’s first acquisition under the new strategic plan announced last month by Georges Pauget, its new chief executive. He aims to spend €5bn outside France by 2008 to boost the share of non-French revenues from 35 per cent to 50 per cent.
Crédit Agricole, which beat off competition from HSBC for Egyptian American Bank, was already present in the country through its investment bank Calyon Bank Egypt, which is partly owned by its Egyptian partner El Mansour & El Magbraby Investment and Development Co (MMID).
The French bank said it had teamed up with MMID to buy the 74.6 per cent of Egyptian American Bank owned by American Express and Bank of Alexandria, the state-owned Egyptian group due for sell-off this year.
MMID will buy 25 per cent of the shares and Crédit Agricole will buy 75 per cent.
They will make an offer at the same terms of E£45 per share for the outstanding shares.
Egyptian American Bank has 36 branches and about 2 per cent of the Egyptian retail banking market. It made net profits of E£433m in the first nine months of 2005 and had 1,200 individual customers and 800 corporate and institutional clients.
Egyptian banking is dominated by four state-owned groups, with a handful of smaller private banks owned by foreign groups, such as Citigroup and HSBC. Cairo last year launched financial reforms, which could eventually lead to privatisation of the big state banks.
Egypt’s economy grew at 4.5 per cent in 2004 and 5.1 per cent in the first quarter of 2005.