Cairo-based United Bank has asked its main shareholder, the Central Bank of Egypt, for a capital infusion of EGP 500 million to cover losses incurred in the preceding fiscal year, Mohamed Ashmawy, the bank's chairman and managing director, told Zawya.
United is wholly owned by the Central Bank of Egypt, which has a 99.9% shareholding. It was created by presidential decree on June 29, 2006, with a paid-up capital EGP 1 billion.
The bank's 2012 budget started with EGP 900 million in losses, Ashmawy said, almost wiping out its capital base. Of the EGP 500 million the bank will raise, EGP 200 million will be allocated to real estate and the rest will be used to cover the provisioning for bad loans, he said.
"We have no plans to sell the bank or any shares. Our focus is now on covering our losses and settling the case arising from the merger," Ashwamy said, referring to the merger of United Bank of Egypt, the Islamic International Bank for Investment and Development, and the Nile Bank into United Bank 2008. Media reports had indicated that Turkey's Isbank, or Turkiye Is Bankasi, was interested in acquiring United Bank.
Tarek Helmy, former managing director of United Bank, told Zawya that a capital increase would rescue the bank and in turn have a positive effect on the Egyptian economy and banking sector. "It will give United the ability to participate in syndicated lending," he said.
© Zawya 2012
