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.
“We’re in a position today where it’s very very difficult to predict or assess what’s going to happen down the line,” Baig said. “It’s a crisis of confidence. We saw a lot of dollarization, which becomes a vicious cycle and it becomes very difficult to break out of. But we do see opportunities.”
Barclays Egypt, which started operations in the mid-1800s when the country was under Ottoman rule, controls about 1.2 percent of the assets of Egypt’s 39 banks, data compiled by Bloomberg show.
Qatar National and Emirates NBD decided to expand in Egypt to gain access to the Arab world’s most populous country, home to more than 83 million people. HSBC Holdings Plc, Europe’s biggest bank, said in October it was seeking to boost its consumer lending and wealth management businesses in Egypt.
Barclays Egypt makes up about 0.1 percent to the British bank’s asset base of 1.63 trillion pounds ($2.5 trillion) of assets as of June 2012, according to Bloomberg News calculations based on financial statements. The bank isn’t planning to issue debt to fund expansion, Baig said. It also has no plans to sell shares to the public, as the British lender’s units in Kenya and Botswana have done, he said.