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Saudi-Egypt talks stall over sale of United Bank

February 23, 2023 at 9:05 am

A view of the front of a United Bank in Cairo [@Financialafrik/Twitter]

Talks between Saudi Arabia and Egypt regarding the sale of the United Bank in Cairo have stalled following disagreements over how to value the multimillion-dollar deal. The breakdown of the talks hinders Cairo’s efforts to obtain foreign finance to ease its economic crisis, Bloomberg has reported.

According to anonymous sources cited by Bloomberg, the dispute over the sale of the state-owned bank to Saudi Arabia’s Public Investment Fund is related to how to calculate the value of the bank in light of the depreciation of the Egyptian pound against the dollar. The Fund began negotiations last year to buy the Egyptian bank as part of a $10 billion investment package that Saudi Arabia pledged to Egypt. At the time, Bloomberg said that the deal could be worth as much as $600 million.

The sources said that the Fund wants to calculate the value of the bank based on the price of the Egyptian pound against the dollar at the time of the completion of the deal. Egypt’s Central Bank, however, prefers to calculate it based on the exchange rate at the beginning of the negotiations. Egypt has devalued the pound three times in the space of a year, making it the third worst-performing currency in the world over 12 months.

The United Bank was established in 2006. It has 65 branches and more than 200 ATMs across Egypt.

In recent months, the Egyptian government has sold assets and shares in companies to Gulf countries in the face of the economic deficit and foreign exchange crisis, amid popular rejection and discontent. There are fears that Arab countries may take advantage of the deteriorating economic conditions in Egypt to acquire public property at prices much lower than their market value, and that the revenue from the sales will be used to pay off the country’s accumulated debts and not benefit the people.

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