Cablegate: Bank of Alexandria Deal to Be Signed October 31

VZCZCXYZ0004
RR RUEHWEB

DE RUEHEG #6501 2951513
ZNR UUUUU ZZH
R 221513Z OCT 06
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 2165
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0212

UNCLAS CAIRO 006501

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ELA, NEA/RA, EB/IDF/OMA
USAID FOR ANE/MEA MCCLOUD AND DUNN
USTR FOR SAUMS
TREASURY FOR NUGENT AND HIRSON
COMMERCE FOR 4520/ITA/ANESA/TALAAT

E.O. 12958: N/A
TAGS: EAID ECON EINV EFIN EG
SUBJECT: BANK OF ALEXANDRIA DEAL TO BE SIGNED OCTOBER 31

Sensitive but unclassified. Not for Internet distribution.

1. (SBU) GOE officials told econoff that the contract for sale of
80 percent of the shares of Bank of Alexandria (BOA) to the Italian
bank SanPaolo IMI would be signed on October 31. The terms of the
contract require Sanpaolo to deposit the $1.6 billion cost of the
purchase into an escrow account held by the Egyptian Ministry of
Finance (MOF) within 5 days. Central Bank of Egypt (CBE) Sub
Governor Tarek Kandil told econoff that CBE's board of directors
would approve the contract at its regular biweekly meeting November
7. Kandil predicted that the final sale, which will take place on
the Cairo and Alexandria Stock Exchange, would be complete by the
end of November. The timeframe depends, however, on the Bank of
Italy, which must also approve the final sale. Kandil said that
Sanpaolo was eager to conclude the sale quickly, and had already
submitted a request for approval to the Bank of Italy.

2. (SBU) MOF officials confirmed Kandil's statements, and told
econoff that MOF had agreed with Sanpaolo to expedite the final
sale, as both sides wanted swift completion of the transaction. The
GOE badly needs the $1.6 billion in revenue from the sale while
Sanpaolo needs to quickly invest liquidity generated by its recent
merger with Banca Intesa.

3. (SBU) Comment: While the GOE's anticipated timeframe for
completion of the BOA deal is somewhat ambitious, it is not
unrealistic. The lengthy period the GOE granted the short listed
bidders to conduct due diligence on BOA and prepare final bids seems
to have paved the way for smooth completion of the sale. End
comment.
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