CAIRO (Reuters) – Commercial International Bank (CIB) President Hisham Ezz al-Arab resigns with immediate effect on orders from the central bank, which cited the Egyptian lender’s compliance concerns as it approved his appointment on Friday. successor.
Egypt’s largest listed bank said it received notification in a letter from the central bank of the decision to dismiss Ezz al-Arab under a new banking law passed this year, but did not disclose further details.
The lender’s statement said it held an emergency board meeting Thursday and was reviewing and investigating all matters raised by the central bank, adding that the board unanimously decided to appoint Sheriff Samy as the non-executive chairman.
The central bank said in a statement that it approved Samy’s appointment and that it should be “in a good position to work to address the Central Bank’s regulatory compliance issues and governance issues that had been communicated to CIB on several previous occasions. “.
CIB’s board of directors had pledged to formulate an “immediate corrective plan,” the central bank said, adding that it would monitor the situation closely.
CIB has major foreign holdings and is by far the largest market capitalization on the Egyptian stock exchange. The bank’s 2019 annual report says it represents more than 43% of the benchmark EGX30 index.
Ezz al-Arab, appointed president in 2002, is among the country’s leading bankers and a well-known figure in Middle Eastern finance.
In a statement on his Facebook page, Ezz al-Arab said he planned to step down as chairman and chief executive last year, but shareholders asked him to continue for another 12 months.
“In view of the current situation with the Central Bank of Egypt, I have decided that the time has come to end my journey with CIB,” the statement said.
Ahead of the CIB board meeting on Thursday, the Egyptian stock exchange said it had suspended trading in the bank’s shares following a request from the Financial Regulatory Authority (FRA). The exchange and FRA could not be reached for comment.
On Friday morning, the bank’s global deposit receipts (GDRs) in London fell 41% before recovering 13% more than on the day. The GDR dropped 17% on Thursday.
A leaked copy of the central bank letter circulating on social media Thursday said the central bank decided to fire Ezz al-Arab for alleged financial negligence at the bank.
Reuters could not verify the letter or whether Ezz al-Arab was being investigated for negligence. Ezz al-Arab was unavailable for comment.
CIB said on a conference call that there were no financial crimes or fraud committed by the bank, according to an investor in the call.
Hopefully, the results of a central bank audit of CIB will be released within days, CIB said.
Egypt’s private banking sector has gradually expanded over the past few decades, and the government has been more aggressive in privatizing banks than in many other sectors.
The central bank planned to sell stakes in several banks it owns, including Banque du Caire, Egypt’s third-largest state bank, but plans have been put on hold due to the COVID-19 pandemic.
Additional reporting by Ehab Farouk and Nadine Awadalla in Cairo; Written by Aidan Lewis and Rachel Armstrong; Editing by David Goodman and David Evans