HSBC sells CIE stake to Credit Agricole – source

London-based bank HSBC Holdings Plc is selling its stake in Credit International d'Egypte (CIE) to France's Credit Agricole and an Egyptian business group, a banking source said.

The source said HSBC was selling 75% of its 90% stake in the commercial bank to Credit Agricole and the remaining 25% to Mansour Maghrabi, an Egyptian business group. The price tag was not immediately known.

HSBC did not comment on the sale. A Credit Agricole spokeswoman in Paris declined to comment. No one could immediately be reached at either the Mansour Group or at Maghrabi for comment.

CIE shares rose LE1.58, or the maximum 5% allowed per session, to LE33.85 early on Monday, giving the company a market capitalisation of LE203.87 million ($52.54 million).

HSBC has owned the stake in CIE since taking over its former owner Credit Commercial de France, Cairo banking analysts said. The remaining 10% or so is owned by bank employees or freely floated.

HSBC had been expected to sell CIE since it had already acquired a local banking operation by increasing its stake in a bank formerly known as Egyptian-British bank, which has since been renamed HSBC.

Credit Agricole has been seeking acquisitions in Egypt after its Credit Agricole Indosuez bid unsuccessfully last year for Misr America International Bank (MAIB) .

Predators wait

Several other foreign banks have been seeking acquisitions in Egypt, including Standard Chartered and National Bank of Kuwait. Egyptian American Bank (EAB) last week said it was up for sale but did not name a buyer.

CSFB banking analyst Ghassan Medawar said that foreign banks have usually had to pay a premium for banking acquisitions in Egypt because authorities give no banking licences for greenfield operations to encourage consolidation. In terms of absolute numbers of banks, Egypt is overbanked, Medawar said.

“But in terms of branches which offer retail banking and services, it is very much underbanked. That is what attracts foreign players,” he said. “Definitely, relative to other sectors in recent years, the banking sector is one of the leading sectors for foreign direct investment in the country,” he added.

“It has fuelled a lot of foreign and regional interest.”

A research report by Cairo's HC Brokerage highlighted the opportunity presented by retail banking in Egypt. “Retail banking products have long neglected a 66.5 million population, with rising per-capita income,” it said.

“Egypt's population is concentrated in 5% of Egypt's area, meaning minimal branch network expansion to increase effective penetration. Pent-up demand for retail banking products, such as personal loans, durable goods loans, debit and credit cards, was not met by banks in the past.”

(Additional reporting by Clelia Oziel in London).

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This article was first published by Reuters on 21 May 2001.