VZCZCXYZ0000
PP RUEHWEB

DE RUEHEG #7059 3391649
ZNR UUUUU ZZH
P 051649Z DEC 06
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 2817
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0236

UNCLAS CAIRO 007059 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
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: ECON EAID EFIN EG
SUBJECT: FINAL BANK OF ALEXANDRIA SALE PENDING CBE APPROVAL 
 
 
Sensitive but Unclassified.  Not for Internet distribution. 
 
¶1.  (U) Econoff met with Mahmoud Abdel Latif, Chairman of Bank of 
Alexandria (BOA) to discuss the final steps in BOA's sale to Italy's 
Intesa-SanPaolo Group.  Abdel Latif has already begun referring to 
BOA as "Alexandria-SanPaolo," which will likely become the bank's 
new name.  If the name is not changed, the line "Member of 
Intesa-Sanpaolo Group" will be added to the BOA logo. 
 
¶2.  (U) Adbel Latif was extremely pleased that SanPaolo had won the 
auction, as its vision for BOA's future most matched his own.  That 
vision includes a doubling of BOA's presence in the Egyptian market 
over the coming 3 years, increasing market share from the current 6% 
to 10-14%.  Expansion in Egypt will be coupled with expansion 
throughout Africa, particularly North Africa.  BOA even plans to 
establish a presence in Italy, as a stand alone operation to serve 
Middle Eastern investors and facilitate transfer of funds from 
Italy, and eventually the rest of Europe, to the Middle East.  The 
ultimate goal is creation of the first international Egyptian bank. 
 
 
¶3.  (SBU) When asked about the status of the sale's execution, Abdel 
Latif indicated it was "ninety-nine point nine percent" complete. 
The Central Bank of Italy gave its approval 4-5 days after the 
auction, but CBE has not yet signed off on the transfer of shares. 
He was confident the final sale would be executed in the next two 
weeks and claimed that the delay was due to disagreement between the 
Ministry of Finance (MOF) and the Central Bank over use of proceeds 
from the sale.  MOF contacts told econoff earlier this week, 
however, that the Central Bank had not approved the sale because 
SanPaolo had not yet named a new board of directors, one of the 
clauses in the sale contract.  When asked about the board of 
directors, Abdel Latif said it was partially formed, and would 
include himself and BOA's Vice Chair, six SanPoalo representatives, 
including the Deputy Chairman, and two as-yet-unspecified GOE 
representatives.  The GOE will retain 15% of BOA's shares after the 
sale, but will sell those shares in an IPO planned for the first 
part of 2007. 
 
¶4.  (SBU) Comment:  The differing reasons given for the delay in CBE 
approval is likely an attempt by both the GOE and SanPaolo to 
deflect blame for the delay.  In all likelihood, both the naming of 
a board of directors and a decision on use of proceeds will have to 
be made before CBE will grant final approval.  Press reports have 
indicated that discussions are underway regarding use of proceeds 
from privatizations to settle part of the non-performing loans 
portfolio of the National Bank of Egypt, lending credence to Abdel 
Latif's claim that the GOE is arguing over use of the proceeds. 
Regardless of the reason for the delay, the sale contract requires 
final execution within 60 days of the deposit of proceeds in escrow. 
 The deposit occurred on November 5, so the deadline is now January 
5, 2007. 
RICCIARDONE