Bankers affirmed that the Central Bank has an absolute right to license banks without the intervention of any other entity, noting that there is no need for establishing more banks.
Tarek Helmy, former CEO of Arab Banking Corporation, said that Military Council intervened in the Central Bank’s role, and he described this intervention as being “stark political compliment”, as there is no need for more banks, assuring that licensing banks is the Central Bank’s role.
Al-Nour Party stated that its bank will rely initially on land speculation. Helmy said that this idea reflects an administrative failure as land speculation is a high risk investment, noting that Al-Nour Party can purchase an existing bank, if the Central Bank disapproves their bank.
Helmy said that Nour Islamic Bank will mainly depend on the deposits of customers who refuse to have Riba (usury).
Al-Nour Party previously stated that the Military Council initially approved establishing Nour Bank, but the final approval requires a political will and the Military Council do not want to take such decisions now.
Al-Nour Party said that the bank will resolve the problem of loans by many alternatives, the most prominent of which is land speculation, as trading in lands and real estate currently is the most efficient way to finance small, medium and large projects, according to Al-Nour Party. The bank will also invest in governmental bonds, despite having interest rates, but Al-Nour considers internal borrowing better than external borrowing.
Upon approving the bank officially, studies will be submitted to People’s Assembly (Lower House of Parliament) for approval, so the bank will be legally established, Al-Nour Party affirmed.
Al-Nour Party said that the bank will affect the stock market negatively, as the bank will be “a parallel form of the stock market”.
Alaa Samaha, a former consultant of minister of finance and a former chief of Blom Bank, said that the Central Bank is the one who has the right to approve banks and that the banking system in Egypt needs no more banks as there are many Islamic banks in Egypt. Regarding Al-Nour Party’s statements about land speculation, Samaha affirmed that this makes Nour Bank outside the concept of banking. Political Parties should not have banks as retaining both power and money would pose a negative impact on society, Samaha added.
Sources at the Egyptian stock market described Nour Bank idea as being “inconsistent and difficult to be evaluated” as there are many banks with Sharia-compliant banking system, but without posing a negative impact upon the stock market.
Amwal Al Ghad
