Citigroup Shuts Egypt Branches on Orders From GovernmentDonal Griffin and Ahmed A. Namatalla
Citigroup Inc., the third-biggest U.S. bank, shut its Egyptian branches on orders from the country’s central bank amid a military crackdown on anti-government protests.
“Citi’s branches were closed today per CBE instruction,” said Shannon Bell, a spokeswoman for the New York-based lender, referring to Egypt’s central bank. “We will follow further instructions from the CBE when they evaluate the situation on Saturday.”
The Central Bank of Egypt ordered banks and the country’s stock exchange to close this week as violence spread between the army-backed government and supporters of ousted President Mohamed Mursi. Citigroup employs about 650 people across nine branches in Egypt, according to Bell.
Egypt’s Muslim Brotherhood has led protests to reinstate former Mursi, ousted by the military last month. The Health Ministry today said the death toll rose to at least 525, with more than 3,717 hurt, while the Brotherhood said the figure was many times higher. The army-backed government has declared a state of emergency and imposed a curfew.
Citigroup, in Egypt since 1975, offers consumer and institutional banking services and has total third-party assets of about $1.6 billion, according to a quarterly filing. James Cowles is head of the bank’s operations in Europe, the Middle East and Africa, which posted a $1.65 billion profit for the first half of 2013.
The bank’s “net investment” in Egypt is about $250 million, Citigroup said in the filing. The firm built up “translation losses” of about $100 million as a result of the decline of the Egyptian pound against the U.S. dollar, the filing shows.
HSBC Holdings Plc, Europe’s biggest bank, has also shut locations across Egypt and is planning to reopen them on Sunday, said Tim Doyne, a spokesman for the London-based lender. The firm has had a presence in Egypt since 1982 and is one of the biggest global banks operating in the country, according to its website. The company has more than 75 branches and 2,300 employees there, according to an e-mailed statement.
“HSBC in Egypt treats the safety of its customers and its employees as a priority,” Doyne said in an e-mail.
HSBC, led by CEO Stuart Gulliver, identified Egypt as a “priority growth market” in a semi-annual filing this month. The bank had a lending exposure of more than $10 billion at the end of June, more than half of which was to financial institutions and corporations, the filing shows. The bank has put in place “systemic crisis-management processes” to respond to the crisis.
“The most material risk to our overall portfolio in Egypt is the economic instability that would be caused by a further significant deterioration in the security situation,” HSBC said in the filing.
The lender made a $117 million profit in Egypt for the first half of the year, compared with $137 million a year earlier, according to the filing.