Cablegate: Bank of Alexandria Sale Contract Signed

VZCZCXYZ0020
RR RUEHWEB

DE RUEHEG #6653 3051512
ZNR UUUUU ZZH
R 011512Z NOV 06
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 2341
RUEHMIL/AMCONSUL MILAN 0043
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0220

UNCLAS CAIRO 006653

SIPDIS

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 SALE CONTRACT SIGNED

1. (U) The contract for sale of 80 percent of the shares of Bank of
Alexandria (BOA) to the Italian bank Sanpaolo IMI was signed on
October 31 by the Chairman of Sanpaolo, Enrico Salza, and Minister
of Finance Youssef Boutros Ghali. Sanpaolo deposited the $1.6
billion cost of the purchase into an escrow account held by the
Egyptian Ministry of Finance (MOF) on October 21. The final sale
will be executed on the stock exchange by the end of November. The
next step, however, is obtaining approval for the sale contract from
the Central Banks of Egypt and Italy. Central Bank of Egypt
officials confirmed to econoff thQthe CBE Board of Directors will
approve the contract at their regularly scheduled monthly meeting
November 7. Once the sale is final, BOA will be the largest private
bank operating in Egypt.

2. (U) Speaking at the EgyptInvest 2006 conference today, Guiseppe
Cuccerese, Head of International Affairs for Sanpaolo, said that
Sanpaolo had no plans to change BOA's name or its management,
including Chairman Mahmoud Abdel Latif. BOA would remain an
"Egyptian" bank, but with a new, international focus. Retail
banking, consumer credit and SME finance will remain BOA's primary
activities, but emphasis will also be placed on investment banking,
according to Cuccerese. When queried about Sanpaolo's interest in
the Egyptian banking sector, Cuccerese pointed to Egypt's renewed
economic growth and its position at the center of the Middle
East/North Africa region. Sanpaolo already has a presence in
Morocco and Tunisia, and plans to use BOA as a platform to further
expand regionally.

3. (U) Comment: An MOF official noted to econoff that the
successful privatization of BOA will set the stage for further
privatization in the banking sector. The GOE has not announced
plans to privatize another public bank, however, but the merger of
Banque du Caire and Banque Misr is scheduled for completion by the
end of the year. Once the merger is complete, Egypt will have only
two public banks, albeit with over 50 percent of the market share.
In the absence of further privatization, the challenge for private
banks will be to chip away at the dominate market share of the
public banks. End Comment.
RICCIARDONE

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