Government specialised and commercial banks have seen last week defaulting clients, whether individuals or companies, visiting banks to settle their debts, within the framework of the initiative launched by the Central Bank of Egypt (CBE) the end of June 2018.
This initiative benefits over 3,500 companies and 337,000 individuals in the National Bank of Egypt (NBE), Banque Misr, Banque du Caire, the Export Development Bank of Egypt (EDBE), the Egyptian Arab Land Bank (EALB), the Agricultural Bank of Egypt (ABE), the United Bank (UBEG), and the Industrial Development Bank.
Government banks, in accordance with this initiative, seek to settle the debts of defaulters, specifically companies, whose debts are less than EGP 10m and individuals’ debts, not including the balances of their credit cards, up until the end of December 2017. This includes individuals and companies who may or may not have legal action taken against them by the banks taking part in the initiative.
The CBE estimated the total accumulated unpaid interests by clients who are approached by this initiative to be EGP 16.8bn, including EGP 12bn for companies with debts less than EGP 10m, in addition to EGP 4.8bn for individual clients.
According to the initiative, banks will exempt defaulting clients from the total accumulated unpaid interests in the case of them committing to paying 100% of the outstanding balance until the end of December 2017.
In return, banks and clients will waive all the lawsuits filed in courts and will discharge the indebted in accordance with the law. Additionally, the clients will be removed from the CBE’s negative list and the iScore company. The ban on the client regarding the debt will be inactive, and he will be approved as a client of the initiative for three years from the date of payment.
Hisham Okasha, the chairperson of the NBE, said that this initiative comes as part of the many initiatives launched by the CBE to support the economy and individuals, as well as create a leap in the performance of companies who are defaulting when it comes to repaying their debts.
He added that this initiative supports the return of companies that were bound to shut down and would reduce burdens on factories and companies and will make way for their return, allowing them to deal with banks again.
According to Okasha, this initiative is not limited to repaying debts and the return of some companies’ business; it also removes their names from the negative lists of the CBE and the iScore company.
The CBE called defaulting clients to address the banks they deal with to ensure quick benefiting from the initiative with the aim of ending the largest number possible of defaulting cases in courts and allowing companies to go back to their economic activities.
According to Yehia Aboul Fotouh, the vice chairperson of the NBE, the defaulting clients of the bank who are eligible to be part of the CBE initiative started visiting the branches of the bank to settle their debts.
Aboul Fotouh explained that the bank has given full powers to branch managers across the country to complete these settlements, noting that once the initiative was launched, the bank announced it in all media to introduce clients to it. It has also addressed clients officially to encourage them to visit the bank to settle their debts.
According to Aboul Fotouh, the number of beneficiaries of this initiative in the NBE is 1,635 companies and 17,000 individuals with total debts of EGP 700m, including EGP 400m for companies and EGP 300m for individuals.
For her part, Dalia El-Baz, the vice chairperson of the NBE, explained that the bank has about 50% of the companies included in the initiative of the CBE. This is the result of the bank’s policies to expand the segment of small and medium enterprises (SMEs) and acquire the largest percentage in funding this segment which supports the economy.
She added that the percentage of defaulting clients that are companies and eligible for the initiative is 2% of the total client companies of the bank at the time when their debts do not exceed one in 10,000 of the funding portfolio of SMEs in the bank.
According to El Baz, the total individual beneficiaries do not exceed 1% of the total loans of bank’s clients from individuals that are estimated to be 1.7 million. Their debts do not exceed half the total debts of retail banking clients in the bank.
She explained that the policies of the NBE aims to put less weight on the loaning portfolio and distributing risks on the largest number possible of clients, as well as ensuring sound management of retail banking. This has led to a reduction in the number and amount of debts by the NBE’s clients.
According to El-Sayed El-Kosayer, the chairperson of the ABE, about 110,000 clients in the bank would benefit from the CBE initiative, pointing out that the total debt owed by these customers amounts to EGP 6bn, with EGP 3bn representing debt assets and EGP 3bn marginalised and accumulated interests on these debts.
El-Kosayer explained that the bank has instructed all concerned sectors to officially notify the clients included in the CBE initiative to visit the bank to settle their debts.
He added that the bank has already received requests from some of its clients and has already settled the debts of 163 customers until last Wednesday with a value of EGP 15m. He pointed out that only EGP 8m were collected from these clients and they were exempted from the rest of the amount.
According to Hamdy Azzam, the vice chairperson of the Industrial Development Bank, the bank has officially addressed its defaulting clients who are eligible to be part of the CBE’s initiative, in order to encourage them to visit the bank’s branches to settle their debts, pointing out that the bank has already started receiving settlement requests from some of its clients.
Azzam explained that the bank has 260 defaulting clients that are companies with debts less than EGP 10m. The total of their debts is estimated to be EGP 496m. Additionally, there are 15 defaulters that are individuals, with total debts of EGP 5m.