Barclays plans to expand in Egypt as French banks retreat

Barclays Plc plans to add branches in Egypt this year as Britain’s second-biggest bank by assets seeks to expand in the North African country after rivals from France sold local units.

Barclays Bank Egypt SAE will boost its branch network by 10 percent in 2013 and is preparing to offer Islamic banking services, Omar Baig, consumer banking director at the Cairo- based lender, said in an interview. Barclays may consider acquiring another lender in the Arab country “should the opportunity present itself,” he said.

“For us, Egypt is a very important economy,” Baig said on March 28. “Our view about Egypt in the long term still remains that it’s a place where we want to be and we want to be a significant player.”

Egypt’s economy has struggled to recover since an uprising more than two years ago toppled Hosni Mubarak and led to a flight of foreign investment. Barclays’ expansion comes after Societe Generale SA agreed in December to sell its 77 percent stake in an Egyptian lender to Qatar National Bank SAQ as Europe’s sovereign debt crisis squeezes profit. The same month, Dubai-based Emirates NBD PJSC agreed to buy BNP Paribas SA’s Egyptian unit.

The political turmoil this year prompted Moody’s Investors Service to downgrade Egypt’s credit rating last month for the sixth time since the 2011 uprising to “Caa1,” the fifth-lowest junk rating. The Egyptian pound has weakened 6.5 percent this year as the central bank took steps to curb access to dollars to stem a drop in foreign reserves. Trading of twelve-month non- deliverable forwards shows investors expect further depreciation of 18 percent over the life of the contracts.

Egypt’s benchmark EGX 30 Index of equities has dropped 7.4 percent this year, making it the world’s seventh worst performer among 93 gauges tracked by Bloomberg. 

(Bloomberg)