CIIC intends to create an integrated financial
group offering an array of financial services including investment
banking, retail banking, insurance, mortgages, and leasing.
Some of the components are already in place, with EFG-Hermes
in investment banking, Orix in leasing, and the new joint venture
with ACE International in insurance. Looking ahead, we anticipate
that the passing of the mortgage law will afford opportunities
for the securitization of residential mortgages.
financial sector suffered from the slower growth and liquidity
squeeze that prevailed in the year 2000. Loan growth slowed
to 10% from the previous year's 12% and the 16% average of the
three years before that. Competitive pressures have been aggravated
by the market entrance of prestigious multinational institutions
like CitiBank, HSBC, and Arab Banking Corporation, with more
expected to follow. Domestic banking, with average returns on
equity of 26% and substantial growth potential in an underdeveloped
retail segment, will naturally attract new competitors. The
accessible number of "bankable" customers has been
pegged at 16 million, compared to the current 6 million depositors.
International banks are keen to gain market share at the expense
of local banks. The result will be fewer, stronger banks better
able to efficiently provide a full range of services.
banking in its various aspects bore the brunt of the Cairo Stock
Exchange slump. The year saw only a handful of placements, mainly
in the cement sector. With trading volume at very low levels,
brokerage and asset management are biding their time and waiting
for better days. These would be signaled by resumption of the
government's delayed privatization program. This is essential
both to revive trading and to allow hitherto small private sectors
to be consolidated into a critical mass. The recent alliance
places CIIC to leverage its influence over the sector (see the
insurance sector is showing faint signs of encouraging change.
Egypt is a tremendously underinsured market. It needs insurance
not only to protect against life and casualty losses but to
collect and mobilize savings. The establishment of a vigorous
insurance (and especially life insurance) industry would be
an important positive step in the development of local capital
markets. CIIC has teamed up with ACE International to assist,
and capitalize on, this process. Leasing is in the early stages
of development. We are partners with Orix, a prominent Japanese