The Egyptian government has decided to provide Banque Misr with EGP 6.3 billion (US$1.04 billion) in capital injection, raising the total of the bank’s capital to EGP 11.3 billion.
The government decided to convert an EGP 5.7 billion loan made to the bank three years ago into bank equity, adding EGP 600 million in currency.
A 125% capital injection is unprecedented in the Egyptian banking sector. Banque Misr is now the largest capital holder of all Egyptian banks, exceeding the National Bank of Egypt, which had been the largest until last week.
The bank added that its shares totaled EGP 2.25 billion instead of one billion shares wholly owned by the state. The share’s nominal value is EGP 5, bringing the bank’s total equity to EGP 12 billion.
Such move comes amidst a forced increase in the volume of the bank’s activities, which is reflected in its budget of more than EGP 180 billon; the injection will be a “huge factor” in supporting the bank’s capital base and enabling the expansion of its lending activities.
The injection will allow the bank to raise its capital to EGP 21 billion, in addition to enjoying hegemony in the lending market and precedence in arranging syndicated loans.
The capital injection will help to strengthen the financial position of the bank, and bring it into compliance with the Basel II accords and positively affect its credit rating.
The government had raised Banque Misr and The National Bank of Egypt’s capital last year, relying on its own reserves, retained earnings, and European Union Loans, the Daily News Egypt reported.
