EGYPT Law and Practice Contributed by: Mahmoud S. Bassiouny, Iman Nassar, Habiba Gamaleldin and Israa Mostafa, Matouk Bassiouny
1. Legal Framework 1.1 Key Laws and Regulations
2. Authorisation 2.1 Licences and Application Process A licence for operating banking activities in Egypt must be given through a process detailed in the New Banking Law under supervision from the CBE. The CBE also oversees the licensing of foreign currency exchange firms, credit rat - ing agencies, money transfer companies, credit guarantee companies and operators of payment systems. Banking activities are defined in the New Bank - ing Law as activities that are undertaken in a recurrent and habitual manner and include the acceptance of deposits, raising funds, and the investment of funds in debt and equity financing, in addition to any activities customarily consid - ered as banking activities (“Banking Activities”). A banking licence can be given to a joint stock company, a branch of a foreign bank or a rep - resentative office. The board of the CBE can grant preliminary approval for a banking licence to a joint stock company or a branch of a for - eign bank subject to certain conditions, which include anti-trust/competition safeguards, capital requirements (at least EGP5 billion, or USD150 million or its equivalent for branches of foreign banks), and being able to identify ulti - mate beneficial ownership. The New Banking Law provides comprehensive regulations for the operation of foreign banks and financial institutions in Egypt. In particular, the branch of a foreign bank or the applicants for a licence of joint stock companies that have a foreign parent financial institution must show that such foreign bank or parent institution is regulated under the framework of a regulator similar to the CBE. The consent of such regula - tor must be obtained, as must its acceptance to
Law No. 194 of 2020 Issuing the Central Bank and Banking Sector Law (the “New Banking Law”) was introduced on 15 September 2020, replacing the previous banking legislation, the Central Bank Law No 88 of 2003 (the “Old Bank - ing Law”). It provides a level of detail to a number of matters that remained unaddressed under the Old Banking Law, and also expands and/or clari - fies some existing topics, such as the following: • an expanded supervisory and regulatory role for the Central Bank of Egypt (CBE”; • data privacy and security; • clarification and organisation of the process for taking collateral for foreign banks; • consolidation of the government’s approach of generalising cashless payments (in tandem with Law No 18 for 2019 regarding cashless payments); • clear permissibility for repo transactions; • capitalisation requirements; and • the creation of a licensing regime for fintech and e-payments activities. In addition to this new legislation, the CBE also routinely issues regulatory directives and circu - lars on a range of topics, complementing the New Banking Law and providing guidance on the implementation of the law. The CBE is an independent regulatory body with public legal personality, along with technical, financial, and administrative independence. It reports directly to the President of Egypt. It can guarantee funds raised by different governmental entities. It also maintains reserves of foreign currencies and can provide bailouts to distressed banks, subject to certain conditions.
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