WASHINGTON, D.C., May 25 -- The International
Finance Corporation (IFC) has approved its largest initial investment in
a financial institution by taking an equity stake of 5% in Commercial International
Bank S.A.E (CIB) in Egypt. IFC's investment will support the privatization
of CIB, which is expected to be the first in the banking sector in Egypt.
CIB's privatization will involve large equity issues by the bank. IFC's
participation will also help strengthen the bank, enabling CIB to expand
its existing operational capability and diversify its product range. CIB
is a leading Egyptian commercial bank with a focus on private corporate
business. It was established in 1975 as a joint venture between the National
Bank of Egypt (NBE) and the Chase Manhattan Banking Corporation of US.
In 1987 Chase sold its stake in the bank to NBE. CIB is at present 70%
owned by NBE and 30% by employees. "The government of Egypt is implementing
a comprehensive broad-based program of policy reform and structural adjustment,"
ndre Hovaguimian, IFC director for Middle East, North Africa and Central
Asia department. "Privatization of financial institutions is the cornerstone
of the adjustment policies being implemented by the government and is vital
to achieving a major transformation in the economy." "IFC has
pursued a three-pronged strategy in Egypt to broaden and deepen the financial
markets," said Khaleel Ahmed, IFC investment officer in charge of
the project. "Through a combination of technical assistance, institution
building and resource mobilization activities, IFC has been able to contribute
steadily to the development of Egypt's financial sector and IFC's investment
in CIB is part of this effort. The project will enable CIB to take advantage
of recent legislative and regulatory reforms designed to foster the development
of a competitive financial market and strong banking institutions in Egypt.
It will also assist the overall Egyptian privatization effort and encourage
CIB's development as an efficient corporate bank that
is well positioned to better serve the requirements of Egyptian enterprises."
IFC is the private sector arm of the World Bank and the largest source
of direct project financing for private sector projects in developing countries.