The board of directors of the Egyptian Arab Land Bank (EALB) will be presenting its development plan to the Central Bank of Egypt (CBE) in early 2018, according to Amr Kamal, EALB’s chairperson.
The new board of directors took office in early October 2017.
According to Kamal, the board, which has a lot of expertise in different fields, has not found it difficult to determine the issues the bank is facing resulting from many past years.
Kamal told Daily News Egypt, in his first interview since he took office, that after presenting the development plan to the CBE, he will be asking it for technical and financial support to contribute to the implementation of the plan and make it one of the major banks in the Egyptian market.
“The bank’s board of directors has received an offer from the CBE to be provided with financial support, however, he prefers to postpone this aid until after determining the financial gap the bank is suffering from,” Kamal said.
The board said that the bank is receiving great support from the CBE, as everything it requested from the central bank was immediately met with a positive response.
“There are two important things that make me very optimistic about succeeding in our task. The first is the great support we get from the CBE, and the second is the presence of a strong board of directors with diverse expertise,” Kamal said.
He noted that he chose the board himself, and very carefully, without intrusion from anyone in order to create harmony between its members.
“The board includes expertise in the fields of engineering, law, mortgage finance, investment, accounting, auditing, non-performing loans, and asset and treasury management,” Kamal added.
In response to questions about what has been achieved in the bank since the new management took office, Kamal said that they are working on returning the bank back to the market once again and attracting a new base of customers as well as managing deposits correctly.
Kamal started out his career life in the banking field, before turning to private work. Soon afterwards, in October 2017, he returned to banking.
According to Kamal, this helps him understand the needs of customers as well as how to attract many of them, whether as loaners or depositors.
“Since we took office, we managed to attract deposits worth more than EGP 1.2bn. We are also negotiating on new loans worth over EGP 2bn in the fields of food, real estate development, petroleum and grain storage,” he said.
Now the bank has more liquidity for loaning in foreign currencies, which was not available before, according to Kamal. The bank also has Egyptian Pound liquidity.
The new management has managed to attract the largest ten real estate development companies to become strategic clients of the bank, thanks to their confidence in the new management.
The new management of the bank aims to close the allocations gap completely by the end of this fiscal year, in June 2018, without any financial support from the CBE.
He explained that there are negotiations regarding selling the assets owned by the bank and have not been making any profits over the past period, with the aim of bridging the allocations gap and achieving capital profits.
The value of the assets that the bank aims to sell is estimated to be EGP 3bn, and there are other assets which the bank is considering ways of benefitting from without selling them.
“The bank’s development plan is in parallel with a restructuring of the bank’s organisational structure which made the bank’s employees optimistic about the existence of new thinking that can leave positive impacts on the bank and consumers,” Kamal said.
He added that the bank’s form and its services will significantly change and the bank will eventually return to its role as a real estate bank and a trade bank with a known name in the Egyptian market.
Kamal pointed out that the bank has a deposits portfolio estimated at EGP 26bn, however, using these deposits in loaning and credit facilitation, as well as shareholding in projects was very weak. He noted that the bank also lacked good marketing and had no products to market, which is not the case now.
“A professional retail banking management was attracted and now creates new products. ATMs are now spread to offer clients proper services, rather than just withdrawal services. In addition, the patterns and looks of plastic cards are changing,” Kamal said.
EALB has branches in Palestine and Jordan. “Our branches in Palestine will not be touched, as the presence of the bank there is considered strategic and there is a good relationship between the new management and the Palestinian monetary management. Also, the branches in Jordan will not be sold, at least at the present time,” Kamal explained.
Kamal said that Jordan is a very important market for the bank, which is why they do not want to exit it now, especially as these branches can play a big role in activating the volume of trade exchange between the two countries, which is currently about $700m dollars and could possible increase in the coming period.
“The bank’s need for liquidity to fill the provision gap or for restructuring does not mean wasting assets that can be good and generate income for the bank, such as foreign branches in Jordan and Palestine,” said Kamal
In response to a question about how the new management of the EALB will deal with the huge amount of debts, about EGP 6bn, Kamal said, “at the outset, I have to point out that the size of the defaults portfolio at the bank is exactly like the rest of the banks, if not less, but the reason its fame in the market came is due to losses incurred by the bank year after year.”
He pointed out that about 80% of the bank’s non-performing loan portfolio belongs to customers working in the tourism sector, which has been suffering for several years and if the activity is reinstated fully, most of the debt will become good debt.
According to Kamal, about 50% of the defaulters in the tourism sector have good assets such as hotels and resorts, which are operational assets. They also have full readiness to make compromises with the bank, and the new bank management is also ready to stand by them.
Kamal pointed out that the regular loan portfolio in the bank is about EGP 5bn, noting that there is a large gap between the volume of loans and deposits with the bank, and there is a plan to reduce that gap, and access to good lending to 60% of the volume of deposits.
“The bank’s management is targetting the size of the bank’s good loans at more than EGP 9bn over the next few years and is expected to reach EGP 20bn later, and in turn, it aims to increase the volume of deposits to EGP 40bn billion pounds,” Kamal said.
The bank owns 27 branches that are spread strategically in Greater Cairo, Assiut, Port Said, Suez, Alexandria, Tanta, Mansoura, Hurghada, and other governorates and cities across the country.
According to Kamal, the bank intends to be in the New Administrative Capital, and plans to open a branch in Dandy Mall, which the bank has already financed, to serve the citizens and owners of the stores located in the mall.
“The bank’s management also aims to bring together the central departments of the bank in one place, rather than in remote locations that limit communication between them,” said Kamal.
Regarding the bank’s participation in the mortgage initiative launched by the CBE to finance limited and middle-income housing, Kamal said that about EGP 1bn of new loans set to by granted by the bank soon will be directed to real estate finance.
Despite being specialised in real estate, the bank’s mortgage portfolio did not exceed EGP 200m, Kamal added, pointing out that the bank is currently working with the largest three real estate finance companies in Egypt.
Regarding small and medium-sized enterprises (SMEs), Kamal said he focuses on financing small projects that contribute to creating real job opportunities.
The EALB also focuses on financing passenger and cargo transport companies, clinics, small treatment centres, pharmacies—especially in provinces, radiology centres, and workshops and spare parts, Kamal said.
He noted that the bank targets to link these projects to its assets, such as shops, so that it could provide borrowers with places to establish their projects as real estate financing. The bank then finances the purchase of necessary equipment and raw materials under the initiative of financing small projects.
Regarding the new bank management’s plan for previous losses, Kamal said these losses would only be absorbed by increasing the bank’s capital, a step that would follow the current restructuring process.
He added that the bank’s management currently aims to reduce its losses, fill the gap of allocations, and then achieve profits.
Kamal pointed out that several committees have been formed to manage the bank’s affairs, namely the audit, risk, governance, workers affairs, and assets committees, as well as the executive committee that is overseen by the chairperson of the bank.
He added that bank has appointed new officials to head the financial and banking operations sectors.
According to Kamal, professional staff was brought to take over the new departments that were set up at the bank, mainly the investment and project management departments.
Kamal believes that these departments are very important for reviewing the technical studies provided by clients and to follow-up on the implementation of projects.
“The EALB’s board of directors’ term is three years, and we aim to recover the bank’s good stature in the Egyptian market during this period,” Kamal said.