Egyptian laws were recently amended to enhance the investment banking environment, with the issuance of Law No. 194 of 2020 regulating the establishment of branches of foreign banks. This law introduces a new vision aimed at attracting more foreign investment and promoting competition in the domestic banking market.
Steps to obtain a license
According to Article 67 of this law, those wishing to open a branch of a foreign bank in Egypt must apply to the Central Bank for preliminary approval. The application must include certain documents, plus an additional fee of US$50,000 to cover the examination of the application.
After submitting the application, it is submitted to the Board of Directors, which decides on it based on the policy of cooperation with the partner bank in the home country. It should be noted that the application must be decided within ninety days of its submission, with the possibility of extending this period.
Procedure after approval
If initial approval is granted, six months are given as a deadline to start the process of establishing the branch. In case of non-commencement, the license shall be considered void.
When applying for the final license, it is required to attach an unconditional guarantee from the parent bank covering all deposits and obligations related to the branch, as well as a delegation of Accredited Directors.
Approval and Registration
Final applications are evaluated within sixty days, where the applicant is quickly notified about the decision. We note that failure to comply with the required documentation may result in loss of the right to apply.
Article 70 also sets the registration fees of banks and their branches, where foreign banks authorized to pay a fee of 500,000 pounds to the headquarters and other fees specified for each branch and agency.
These legal amendments represent a strategic step towards enhancing the investment climate in the banking sector, contributing to the development of the local economy and achieving greater transparency and regulation in banking activities. With these mechanisms in place, it becomes easier for foreign banks to enter the Egyptian market and participate effectively in the development of the national economy.
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