Standard Chartered is looking to acquire a bank in Egypt to ride an expected boom in one of the Middle East’s largest economies, the firm’s regional head said. The bank also plans to expand operations in Iraq this year.
Many European banks are under pressure to cut costs and bolster their capital in the wake of the global financial crisis, but Christos Papadopoulos said such pressures would not deter Standard Chartered from growing in the Middle East.
“The Middle East is not only a regional hub for us but a global hub given its position as a trade corridor between Asia and Africa,” Papadopoulos, chief executive for the Middle East, North Africa and Pakistan, told Reuters in an interview last week.
He said of Egypt, “The foreign reserves are at critical levels. Currency is depreciating and I won’t be surprised if it depreciates further.”
But he added that the bank believed Egypt was in a transition towards a more stable economic and political system, making investment attractive from a long-term perspective.
In late 2011, Standard Chartered ended talks to acquire the Egyptian unit of Greece’s Piraeus Bank, which was believed to be valued at over $200 million, citing deterioration of the global macroeconomic environment.
Papadopoulos did not elaborate in the interview on what had changed since then, but made clear that Standard Chartered was again looking at Egypt.
“The only entrance point to Egypt is through acquisitions. We expect that there could be other banks coming to the market for sale, and we will be ready to grab the opportunity,” he said, declining to name potential acquisition targets.
French banks Societe Generale and larger rival BNP Paribas agreed last year to sell their banking arms in Egypt to Qatar National Bank and Dubai’s Emirates NBD.
France’s Credit Agricole and Italy’s Intesa Sanpaolo may also eventually sell Egyptian operations, banking sources in the region have said. A Credit Agricole spokeswoman in Paris declined to comment, while Intesa Sanpaolo chief executive Enrico Cucchiani said in January: “Egypt is a country to be monitored. However at the moment Bank of Alexandria is having positive results. We look at it carefully.”
Piraeus received several expressions of interest in its Egyptian unit but last July halted the sale, saying it would not seek buyers in the near future at least. It did not give its reasons.
In the Gulf region, Standard Chartered will focus on lending opportunities in Saudi Arabia and Qatar because of the huge infrastructure building plans of oil-rich governments there, Papadopoulos said.
The bank, which currently has a representative office in Iraq, plans to open branches this year in the cities of Baghdad, Basra and Erbil as demand for project financing booms.
Papadopoulos said, “The amount of economic activity in Iraq now is substantial. We always wanted to be onshore in Iraq. It was never a question of if but a question of when.”
Companies including oil giants BP, Royal Dutch Shell and Italy’s Eni have announced plans to invest in multi-billion dollar projects in the country.
“Iraq needs everything from pipelines, power generation, infrastructure and housing. All this needs financing.”