US embassy cable - 05CAIRO2967

C O N F I D E N T I A L CAIRO 002967 
 
SIPDIS 
 
STATE FOR NEA/ELA, NEA/RA, AND EB/IFD 
TREASURY FOR MILLS/NUGENT/PETERS 
USAID FOR ANE/MEA MCCLOUD 
COMMERCE FOR 4520/ITA/MAC/ANESA/TALAAT 
 
E.O. 12958: DECL: 04/18/2015 
TAGS: ECON, EAID, EFIN, EG, Banking Sector 
SUBJECT: EGYPTIAN AMERICAN BANK TO BE SOLD 
 
 
Classified by Charge Gordon Gray for reasons 1.4 (b) and (d). 
 
1.   (C) Roderick Richards (protect), Managing Director of 
the Egyptian American Bank (EAB), told the Charge on April 18 
that the Board of EAB intended to put the bank up for sale. 
Richards said the EAB Board would meet on April 19 to approve 
the intended sale, and that public announcement would follow 
on aPRIL 20.  RichardS noted that the Board would bring in an 
investment firm to broker the deal, which he believed would 
be concluded by the end of the year or the first quarter of 
2006.  Richards predicted that EAB would be purchased either 
by a large Gulf bank seeking to recycle petrodollars or a 
multinational wanting to establish or expand its presence in 
Egypt. 
 
2.  (SBU) EAB is a joint venture bank partially owned by 
American Express and the Bank of Alexandria (BOA).  Richards 
had recently indicated that American Express and BOA were 
under pressure from the GOE to sell EAB quickly, as part of 
the GOE's effort to divest its shares in joint venture banks, 
one of the benchmarks in the GOE-USG MOU on financial sector 
reform.  BOA is also the public bank identified by the GOE 
for privatization by 12/31/2005, another of the benchmarks 
agreed upon in the MOU.  The sale of EAB will increase BOA's 
assets, improving its market value as it prepares to 
privatize. 
 
3.  (SBU) Comment:  News of the impending sale of EAB 
indicates that the GOE is taking seriously its commitment to 
meeting the benchmarks in the MOU, or at a minimum, to 
maintain the current reform momentum in the banking 
sector.End comment. 
 
 
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GRAY