Before obtaining a new license, Standard Chartered tried several times to buy out a local lender.
Standard Chartered received the green light to launch full-fledged banking operations in Egypt. The arrival of the UK lender marks a milestone after most Western banks exited the country between 2012 and 2017.
“The move comes in light of the resilience and strength of the Egyptian economy. Thanks to the wise leadership of Central Bank of Egypt, the banking sector has experienced great stability during the past few years,” according to a prepared statement by Standard Chartered.
Following strong measures to promote financial inclusion, the Egyptian banking sector’s assets more than doubled in a decade, from $221 billion in 2010 to $540 billion by the third quarter of 2021. During the pandemic, GDP growth maintained a remarkable 3.6% in 2020 and is projected to reach more than 5% in 2022.
“The Egyptian economy is booming and so is the financial sector,” says Ali Awdeh, director of research at the Union of Arab Banks. “This is opening opportunities for foreign banks in trade finance, investment [and] remittances.”
To encourage international lenders to return, Egypt’s central bank began issuing new banking licenses in late 2020. Previously, banks that wanted to enter the Egyptian market had to acquire an existing lender.
Gulf banks already secured substantial market shares through mergers and acquisitions. In the past decade, seven Gulf Cooperation Council banks extended their footprints in Cairo. The latest deals include Bahraini Bank ABC’s acquisition of Lebanese Blom Bank’s 41 branches, while First Abu Dhabi (FAB) took over Bank Audi. In addition, FAB announced plans in early February to buy a majority stake in EFG Hermes, Egypt’s biggest investment bank.
Before obtaining a new license, Standard Chartered tried several times to buy out a local lender.
“Acquiring an existing portfolio of loans and deposits is easier, faster and perhaps cheaper than starting from scratch,” adds Awdeh. By starting new, Standard Chartered can “come in with another banking culture and serve different segments like wealth management or private banking.”
The UK lender expects to open its first branch in Cairo in September 2022.
