The FINANCIAL -- The European Bank for Reconstruction and Development (EBRD) is providing a subordinated loan of up to US$ 125 million to Emirates NBD Egypt to strengthen the bank’s capital base.
The subordinated loan qualifies as tier II capital under the recently modified regulations of the Central Bank of Egypt (CBE). It is the first time under these new regulations that a third party lender provides such an instrument to an Egyptian bank, according to EBRD.
Emirates NBD Egypt is a private sector bank in Egypt and a wholly-owned subsidiary of Emirates NBD PJSC, the largest bank in the United Arab Emirates (UAE) and a leading regional player.
The EBRD financing package consists of two tranches, the first being a US$ 50 million committed loan to strengthen the capital structure of Emirates NBD Egypt and support its growth strategy of becoming a leading private sector bank in Egypt. The second tranche is uncommitted and amounts to US$ 75 million.
Philip ter Woort, the departing EBRD Director for Egypt, said: “Allowing third party debt to this asset class could become an important additional tool for banks to manage their capital ratios and was developed in less than one year through a strong cooperation between CBE, Emirates NBD and the EBRD. Through this loan we are very pleased to support Emirates NBD Egypt’s ambitious growth plans which can bring many benefits to the country, including for the SME sector.”
Giel-Jan M. Van Der Tol, CEO and Board Member of Emirates NBD Egypt, said: “We are proud to be the first bank in Egypt to apply this innovative transaction structure to enhance our capital base. This will allow us to further grow our business in Egypt as well as continue to support the development of the real economy.”
Strengthening the capital base of Emirates NBD Egypt will boost its outreach to the Egyptian economy. This will support the country’s resilience as one of the EBRD’s six transition qualities defining the Bank’s work. According to the EBRD, a well-functioning market economy should be competitive, inclusive, well-governed, green, resilient and integrated.
The EBRD has invested over €2.3 billion in Egypt through 43 projects since the start of its activities in the country at the end of 2012. The Bank’s areas of investment include the financial sector, agribusiness, manufacturing and services, as well as infrastructure projects such as power, municipal water and wastewater services and support to transport services.
Emirates NBD Egypt is a fully-owned subsidiary of the Emirates NBD Group, the leading bank in the United Arab Emirates. Emirates NBD entered the Egyptian market in 2013 through the purchase of BNP Paribas’ Egyptian operations. Following significant growth, it now has over 2,200 staff, 65 branches and 230 ATMs, and is the largest subsidiary of the Emirates NBD Group outside its home country. Emirates NBD Egypt now aims to become one of the nation’s leading private sector banks by 2020, underpinned by continued gains in banking innovation, digitisation and service quality.