Gamal Negm, deputy governor of Central Bank of Egypt (CBE), negated what was published in some newspapers that CBE will give more Islamic banking licenses.
The 39 banks in Egypt can open branches for Islamic banking services as long as they comply with the regulator’s standards and have adequate capital levels and strong risk management, Negm added in an interview with Amwal Al Ghad.
CBE does not oppose banks’ that have Islamic windows licenses in expansion in Islamic banking services or foreign Islamic banks in acquisition of Egyptian banks and transforming them to Islamic banks as long as they have Islamic windows licenses as National Bank for Development was acquired by Abu Dhabi Islamic Bank.
As Al Nour Party requested that all banks shall offer 100% Islamic banking operations, Negm affirmed before the economic affairs committee at the People’s Assembly (Lower House of Parliament) that CBE will not give more Islamic banking licenses in the current period in accordance with the Presidential Decree issued in 1984 because the increased number of banks in Egypt was a reason for the weakness the Egyptian banking sector witnessed as some of them went bankrupt and collapsed. There were 64 banks in 1997, and declined to 57 banks in 2004, reaching 39 banks now.
Sources at CBE affirmed that the regulator last March rejected requests from four commercial banks to have Islamic banking license, saying the there is low demand on Islamic banking service. Islamic banking operations registered 5% of the Egyptian banking market, while there are 14 banks with Islamic banking licenses; three of which conduct 100% Islamic banking services and 11 of which conduct Islamic banking operations in some of their branches. CBE will not give more Islamic banking licenses till its market share registers 10% of the Egyptian banking market, sources said.
There are 200 branches offering Islamic banking services in Egypt with deposits of EGP 80 billion, finances of EGP 50 million and eight Islamic sharia-compliant investment funds, according to the latest statistics last February.
Sources expected Islamic banking in Egypt to grow by a rate ranging from 15% to 20%, due to the increasing demand on this kind of banking service regionally and internationally.
The latest international statistics about Islamic banking showed that there are 500 Islamic banks with value of assets of US$ 800 billion and 320 commercial banks conducting Islamic banking operations in some branches with total assets of US$ 200 billion in 58 countries.
