VZCZCXYZ0018
RR RUEHWEB

DE RUEHEG #4876/01 2201327
ZNR UUUUU ZZH (CCY ADX078B87 MSI3684 - 648)
R 081327Z AUG 06
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 0405
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0174

UNCLAS CAIRO 004876 
 
SIPDIS 
 
C O R R E C T E D  C O P Y  (AMB SIG ADDED) 
 
SIPDIS 
 
SENSITIVE 
STATE FOR NEA/ELA, NEA/RA, EB/IDF AND EB/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: ECON EFIN ETRD EINV EG
SUBJECT: EGYPT:  GOE ANNOUNCES SHORT LIST OF BUYERS FOR BANK OF 
ALEXANDRIA, MAKES PROGRESS ON OTHER FINANCIAL SECTOR MOU BENCHMARKS 
 
 
Sensitive but Unclassified.  Not for Internet distribution. 
 
REF:  A. Cairo 1838 
  ¶B. Cairo 3746 
 
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Summary 
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¶1.  (U) On August 2 the GOE announced a short-list of prospective 
buyers for the state-owned Bank of Alexandria (BOA).  Final bids are 
due from the six short-listed entities by the end of September.  GOE 
contacts have provided various estimates of when the BOA sale will 
be completed, but post estimates it will not be done before the end 
of the year.  Announcement of the short-list is a step forward in 
the privatization of BOA, one of the benchmarks in the USG-GOE 
Financial Sector MOU.  The USAID Mission and GOE are close to 
finalizing a Monitoring Program for the Financial Sector MOU that 
will specify the documentation needed to certify that this and other 
benchmarks in the MOU have been met.  End summary. 
 
----------------------------------- 
GOE ANNOUNCES SHORT-LIST OF BIDDERS 
----------------------------------- 
 
¶2.  (U) On August 2, the Central Bank of Egypt (CBE) and the 
Ministry of Investment announced a short-list of six financial 
entities that will be allowed to continue in the competition for 
purchase of BOA.  The six candidates will now be allowed to carry 
out their own due diligence on the bank in preparation for 
submitting final financial and technical bids on the bank.  The 
short-listed banks/consortia are: 
 
- the Arab Bank Group (based in Jordan) and the Arab National Bank 
of Saudi Arabia; 
- Mashreqbank (based in Dubai) and Dubai Investment Group; 
- Commercial International Bank (Egypt); 
- BNP Paribas (France); 
- Sanpaolo IMI (Italy); 
- EFG Eurobank (Greece). 
 
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TIMING OF THE SALE 
------------------ 
 
¶3.  (SBU) Final financial and technical bids from the six candidates 
are due to the GOE at the end of September.  Local contacts have 
given varying estimates of when sale of BOA will be completed. 
Tarek Amer, Deputy Governor of CBE, told econoff that the sale would 
be completed by the end of the current calendar year.  He stressed 
that although the process has moved slower than some would like, the 
GOE is committed to ensuring that the privatization process is 
carried out in a manner that maximizes the benefit to all parties. 
The privatization of BOA will set a precedent for future 
privatization of public banks.  According to Amer, any perception on 
the part of the business community or the Egyptian public that the 
sale was not affected in a transparent manner would lend credence to 
the voices criticizing the GOE's broader privatization program (Ref 
B). 
 
¶4.  (SBU) Other contacts were more sanguine about the possibility of 
concluding the sale quickly.  Ziad Bahaa el Din, Chairman of the 
Egyptian General Authority for Free Zones and Investment, told 
econoff and a visit U.S. Congressional staff delegation that the 
sale would most likely be concluded by October, soon after final 
bids were received.  Bahaa el Din pointed out that progress in 
putting the bank up for sale was slow because the GOE wanted BOA to 
be in sound financial condition before it was placed on the market. 
He was confident that bidders would be eager to conclude the sale 
quickly, as the bank's branch system was so extensive that the 
purchaser would have an immediate presence throughout the country. 
 
 
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COMMENT 
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¶5.  (SBU) Announcement of the short-list of bidders is a step 
forward for the GOE in meeting its commitment under the Financial 
Sector MOU to privatize BOA.  By undertaking their own due 
diligence, the six bidders will invest their own resources in the 
competition to purchase the bank, an indication that they take the 
 
GOE's commitment to sell BOA seriously.  The GOE's own audit and due 
diligence on BOA were completed in late 2005 and the bank's NPL 
portfolio (LE 6.9 billion) was settled by the Ministry of Finance 
and CBE in February 2006, using proceeds from the Telecom Egypt IPO 
in December 2005. 
 
¶6.  (SBU) In addition to progress on sale of BOA, the GOE has made 
progress on several other benchmarks in the MOU.  The GOE and USAID 
Mission are also close to agreement on the terms of the DSP-II 
Monitoring Plan that will specify the documentation needed to 
certify that benchmarks have been met.  Post will report septel on 
progress toward meeting the other benchmarks of the MOU.  End 
Comment. 
RICCIARDONE