Keep Us Strong WikiLeaks logo

Currently released so far... 97115 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ETRD EAGR ETTC EAID ECON EFIN ECIN EINV ELAB EAIR ENRG EPET EWWT ECPS EIND EMIN ELTN EC ETMIN EUC EZ ET ELECTIONS ENVR EU EUN EG EINT ER ECONOMICS ES EMS ENIV EEB EN ECE ECOSOC EK ENVIRONMENT EFIS EI EWT ENGRD ECPSN EXIM EIAD ERIN ECPC EDEV ENGY ECTRD EPA ESTH ECCT EINVECON ENGR ERTD EUR EAP EWWC ELTD EL EXIMOPIC EXTERNAL ETRDEC ESCAP ECO EGAD ELNT ECONOMIC ENV ETRN EIAR EUMEM ENRGPARMOTRASENVKGHGPGOVECONTSPLEAID EREL ECOM ECONETRDEAGRJA ETCC ETRG ECONOMY EMED ETR ENERG EITC EFINOECD EURM EENG ERA EXPORT ENRD ECONEINVETRDEFINELABETRDKTDBPGOVOPIC EGEN EBRD EVIN ETRAD ECOWAS EFTA ECONETRDBESPAR EGOVSY EPIN EID ECONENRG EDRC ESENV ETT EB ENER ELTNSNAR ECHEVARRIA ETRC EPIT EDUC ESA EFI ENRGY ESCI EE EAIDXMXAXBXFFR EETC ECIP EIAID EIVN EBEXP ESTN EING EGOV ETRA EPETEIND ELAN ETRDGK EAIDRW ETRDEINVECINPGOVCS EPEC ENVI ELN EAG EPCS EPRT EPTED ETRB EUM EAIDS EFIC EFINECONEAIDUNGAGM EAIDAR ESF EIDN ELAM EDU EV EAIDAF ECN EDA EXBS EINTECPS ENRGTRGYETRDBEXPBTIOSZ EPREL EAC EINVEFIN ETA EAGER EINDIR ECA ECLAC ELAP EITI EUCOM ECONEFINETRDPGOVEAGRPTERKTFNKCRMEAID EARG ELDIN EINVKSCA ENNP EFINECONCS EFINTS ECCP ETC EAIRASECCASCID EINN ETRP EAIDNI EFQ ECOQKPKO EGPHUM EBUD ECONEINVEFINPGOVIZ ENERGY ELB EINDETRD EMI ECONEFIN EIB EURN ETRDEINVTINTCS EIN EFIM ETIO ELAINE EMN EATO EWTR EIPR EINVETC ETTD ETDR EIQ ECONCS EPPD ENRGIZ EISL ESPINOSA ELEC EAIG ESLCO EUREM ENTG ERD EINVECONSENVCSJA EEPET EUNCH ECINECONCS ETRO ETRDECONWTOCS ECUN EFND EPECO EAIRECONRP ERGR ETRDPGOV ECPN ENRGMO EPWR EET EAIS EAGRE EDUARDO EAGRRP EAIDPHUMPRELUG EICN ECONQH EVN EGHG ELBR EINF EAIDHO EENV ETEX ERNG ED
KMDR KPAO KPKO KJUS KCRM KGHG KFRD KWMN KDEM KTFN KHIV KGIC KIDE KSCA KNNP KHUM KIPR KSUM KISL KIRF KCOR KRCM KPAL KWBG KN KS KOMC KSEP KFLU KPWR KTIA KSEO KMPI KHLS KICC KSTH KMCA KVPR KPRM KE KU KZ KFLO KSAF KTIP KTEX KBCT KOCI KOLY KOR KAWC KACT KUNR KTDB KSTC KLIG KSKN KNN KCFE KCIP KGHA KHDP KPOW KUNC KDRL KV KPREL KCRS KPOL KRVC KRIM KGIT KWIR KT KIRC KOMO KRFD KUWAIT KG KFIN KSCI KTFIN KFTN KGOV KPRV KSAC KGIV KCRIM KPIR KSOC KBIO KW KGLB KMWN KPO KFSC KSEAO KSTCPL KSI KPRP KREC KFPC KUNH KCSA KMRS KNDP KR KICCPUR KPPAO KCSY KTBT KCIS KNEP KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KNNB KGCC KINR KPOP KMFO KENV KNAR KVIR KDRG KDMR KFCE KNAO KDEN KGCN KICA KIMMITT KMCC KLFU KMSG KSEC KUM KCUL KMNP KSMT KCOM KOMCSG KSPR KPMI KRAD KIND KCRP KAUST KWAWC KTER KCHG KRDP KPAS KITA KTSC KPAOPREL KWGB KIRP KJUST KMIG KLAB KTFR KSEI KSTT KAPO KSTS KLSO KWNN KPOA KHSA KNPP KPAONZ KBTS KWWW KY KJRE KPAOKMDRKE KCRCM KSCS KWMNCI KESO KWUN KPLS KIIP KEDEM KPAOY KRIF KGICKS KREF KTRD KFRDSOCIRO KTAO KJU KWMNPHUMPRELKPAOZW KEN KO KNEI KEMR KKIV KEAI KWAC KRCIM KWCI KFIU KWIC KCORR KOMS KNNO KPAI KBWG KTTB KTBD KTIALG KILS KFEM KTDM KESS KNUC KPA KOMCCO KCEM KRCS KWBGSY KNPPIS KNNPMNUC KWN KERG KLTN KALM KCCP KSUMPHUM KREL KGH KLIP KTLA KAWK KWMM KVRP KVRC KAID KSLG KDEMK KX KIF KNPR KCFC KFTFN KTFM KPDD KCERS KMOC KDEMAF KMEPI KEMS KDRM KEPREL KBTR KEDU KNP KIRL KNNR KMPT KISLPINR KTPN KA KJUSTH KPIN KDEV KTDD KAKA KFRP KWNM KTSD KINL KJUSKUNR KWWMN KECF KWBC KPRO KVBL KOM KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KEDM KFLD KLPM KRGY KNNF KICR KIFR KM KWMNCS KAWS KLAP KPAK KDDG KCGC KID KNSD KMPF KPFO KDP KCMR KRMS KNPT KNNNP KTIAPARM KDTB KNUP KPGOV KNAP KNNC KUK KSRE KREISLER KIVP KQ KTIAEUN KPALAOIS KRM KISLAO KWM KFLOA
PHUM PINR PTER PGOV PREL PREF PL PM PHSA PE PARM PINS PK PUNE PO PALESTINIAN PU PBTS PROP PTBS POL POLI PA PGOVZI POLMIL POLITICAL PARTIES POLM PD POLITICS POLICY PAS PMIL PINT PNAT PV PKO PPOL PERSONS PING PBIO PH PETR PARMS PRES PCON PETERS PRELBR PT PLAB PP PAK PDEM PKPA PSOCI PF PLO PTERM PJUS PSOE PELOSI PROPERTY PGOVPREL PARP PRL PNIR PHUMKPAL PG PREZ PGIC PBOV PAO PKK PROV PHSAK PHUMPREL PROTECTION PGOVBL PSI PRELPK PGOVENRG PUM PRELKPKO PATTY PSOC PRIVATIZATION PRELSP PGOVEAIDUKNOSWGMHUCANLLHFRSPITNZ PMIG PREC PAIGH PROG PSHA PARK PETER POG PHUS PPREL PS PTERPREL PRELPGOV POV PKPO PGOVECON POUS PGOVPRELPHUMPREFSMIGELABEAIDKCRMKWMN PWBG PMAR PREM PAR PNR PRELPGOVEAIDECONEINVBEXPSCULOIIPBTIO PARMIR PGOVGM PHUH PARTM PN PRE PTE PY POLUN PPEL PDOV PGOVSOCI PIRF PGOVPM PBST PRELEVU PGOR PBTSRU PRM PRELKPAOIZ PGVO PERL PGOC PAGR PMIN PHUMR PVIP PPD PGV PRAM PINL PKPAL PTERE PGOF PINO PHAS PODC PRHUM PHUMA PREO PPA PEPFAR PGO PRGOV PAC PRESL PORG PKFK PEPR PRELP PREFA PNG PGOVPHUMKPAO PRELECON PINOCHET PFOR PGOVLO PHUMBA PRELC PREK PHUME PHJM POLINT PGOVPZ PGOVKCRM PGOVE PHALANAGE PARTY PECON PEACE PROCESS PLN PRELSW PAHO PEDRO PRELA PASS PPAO PGPV PNUM PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PRFE POGOV PEL PBT PAMQ PINF PSEPC POSTS PHUMPGOV PVOV PHSAPREL PROLIFERATION PENA PRELTBIOBA PIN PRELL PGOVPTER PHAM PHYTRP PTEL PTERPGOV PHARM PROTESTS PRELAF PKBL PRELKPAO PKNP PARMP PHUML PFOV PERM PUOS PRELGOV PHUMPTER PARAGRAPH PERURENA PBTSEWWT PCI PETROL PINSO PINSCE PQL PEREZ PBS

Browse by classification

Community resources

courage is contagious

Viewing cable 09CAIRO1200, Update on banking sector reforms in Egypt

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #09CAIRO1200.
Reference ID Created Released Classification Origin
09CAIRO1200 2009-06-28 08:40 2011-08-24 16:30 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Cairo
VZCZCXYZ0000
RR RUEHWEB

DE RUEHEG #1200/01 1790840
ZNR UUUUU ZZH
R 280840Z JUN 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 2986
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS CAIRO 001200 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV EAID PGOV PREL EG
SUBJECT:  Update on banking sector reforms in Egypt 
 
1. (SBU) Key points: 
 
--   Egypt's banking sector continues to weather the storm better 
than most; 
 
--   The U.S.-backed financial sector MOU has contributed to the 
financial sector's improvements; 
 
--   The next round of audits is unlikely to show that GOE has met 
the MOU's target of 62.5% of loans coming from private banks; 
 
--   The National Bank of Egypt is reportedly starting to turn 
itself around significantly, largely as a result of its new CEO. 
 
Background 
---------- 
 
2. (SBU) In 2005, the U.S. began working closely with Egypt's new 
reform cabinet and the World Bank, African Development Bank (AFDB) 
and IMF to support reform in the financial sector.  As a result of a 
long and intensive dialogue, the U.S. designed a Financial Sector 
MOU which supported several policy reform recommendations which had 
been identified by the IMF and World Bank's Financial Sector 
Assessment Program (FSAP).  The Financial Sector MOU seeks to 
strengthen the overall financial sector through restructuring and 
privatizations of the banking sector, developing the mortgage market 
and enhancing the efficiency of the securities market.  The Head of 
Banking Supervision at the Central Bank of Egypt (CBE), Gamal Negm, 
spoke with us recently about progress of the banking reform effort 
and specifically about the Financial Sector MOU. 
 
3. (SBU) Three of the Financial Sector MOU benchmarks were tied to 
actual performance in improving the quality of the financial sector. 
 Based on a 2005 baseline audit and three subsequent audits (for 
fiscal years 2006, 2007, and 2008) disbursements are released on a 
pro rata basis according to actual progress.  Payments for 2006 were 
disbursed last year and progress against 2007 progress has been 
validated and is being processed now. The audit results for 2008 are 
expected to be presented to us prior to the Sept. 30, 2009 end of 
the fiscal year.  The three benchmarks under the MOU include: 
increasing the private sector banks' share of new loans (from 43.4% 
in 2005 to a target of 62.5% by the 2008 audit results); reducing by 
50% the number of non-performing loans (NPLs) in the banking system 
(from 42.4% in 2005 to a target of 20.6% in the 2008 audit results); 
and recovering 10% of all NPLs in cash. 
 
4. (SBU) Most other benchmarks under this MOU have been completed 
and disbursements made.  Examples include: (i) The CBE shall 
establish a monetary policy unit and a non-performing loan unit; 
(ii) a primary dealer system shall be established to purchase 
government debt; (iii) the four largest banks shall be audited and 
one bank sold; (iv) a national land title registration shall be 
established; (v) a private credit bureau created; and (vi) a 
corporate governance best practice code shall be published.  Due to 
Congressional rescissions, the funding for two benchmarks was 
removed.  These two benchmarks were the privatization of a public 
insurance company and adopting a master repurchase agreement in 
order to deepen the secondary debt market. 
 
Where do we stand? 
------------------ 
 
5. (SBU) Gamal Negm shared several observations about the banking 
system.  First, he indicated that the Egyptian banking system 
remains very sound and that the impacts of the global slowdown have 
not manifested themselves in the Egyptian banking system.  He 
attributed this to the types of reforms that the GOE initiated in 
the years prior to the crisis and the relative conservative approach 
of Egyptian regulators.  He indicated that the CBE is largely 
focused on improving its ability to implement Basel II banking 
regulations,and that the European Central Bank now has a residet 
advisor in place full time at the CBE who is hlping them with Basel 
II implementation (Note: CE had a resident advisor from the 
European Centrl Bank working on banking supervision issues until 
the end of 2007.  Basel II banking regulations ar designed to 
attempt to improve international baking regulations by improving 
risk and capital mnagement requirements so that a bank holds 
capitl reserves appropriate to the risk to which the bak is 
exposed. End note) 
 
6. (SBU) Turning to th financial sector MOU, he noted that the 
audits or the 2008 fiscal year are ongoing and will be copleted in 
the coming months.  He expected good pogress on the NPL target, but 
recognized that th target of 62.5% of the loans coming from privatesector 
 banks would likely not be met (Note: The cah recovery target 
has already been fully met. En note.).  When the bank restructuring 
reform begn, the CBE anticipated that the growth of the privte 
sector banks and their ability to attract new ustomers would result 
in the share of new loans rom state-owned banks contracting as a 
percentag of total banking assets.  That has happened to a egree, 
but the largest state-owned bank, the Natonal Bank of Egypt (NBE), 
now has a dynamic CEO, a former CBE deputy governor, Tarek Amer, who 
has injected some life into NBE.  Amer has been able to attract high 
quality staff to NBE and tried to recast the bank's historical 
stodgy state-owned image.  Negm believes that NBE will continue to 
grow (in both nominal and percentage terms) and will "trounce its 
competition" in the coming years.  As a result, Negm expects that 
the progress towards the target of 62.5% of loans coming from 
private banks will not be met in the 2008 data (Note: The private 
sector share stood at 54.7% as of the end 2007 data.  End note.). 
 
7. (SBU) Negm noted that while the NPL figures are much improved 
since 2005, when taken into consideration with the huge increase in 
provisioning in the banks, the numbers look even better.  He noted 
that all the banks are now fully provisioning for their NPLs, 
something which had historically not been the case.  He specifically 
noted that NBE sold a particular investment worth six billion EGP 
(US$ 1.1 billion) right before the financial crisis and put the full 
amount into provisioning. 
 
8. (SBU) Comment: Negm has been an important interlocutor for the 
past several years and is a well regarded regulator.  His commentary 
that one of the benchmarks will likely not be fully met is not 
surprising and his analysis that NBE will grow as a result of its 
improved management is likely accurate.  In meetings with some of 
the new staff of NBE, we do sense a greater focus on service, risk 
management, and product diversification.  His comment that the 
banking sector is in better condition today than it has been for 
years is consistent with that of the Central Bank governor and other 
independent voices.  However, NBE and the two other state-owned 
banks have been poorly managed for years and have been vulnerable to 
government interference, so to permanently change the culture and 
performance of the institutions will take much time.  After the sale 
of the Bank of Alexandria in 2006 and the suspension of the sale of 
Banque du Caire in 2008, the GOE does not seem to be keen to try to 
sell any more public sector banks.  Egyptian banks remain very 
liquid with very conservative loan-to-deposit ratios, and while this 
has served the banking sector well during the current global 
downturn, it has meant that the Egyptian banking system is still an 
inefficient distributor of capital and that many individuals and 
companies have limited access to affordable finance. End comment. 
 
SCOBEY