CAIRO (Reuters) – Commercial International Bank (CIB) Chairman Hisham Ezz al-Arab is stepping down with immediate effect under orders from the central bank, which cited compliance concerns at the Egyptian lender as it approved his successor’s appointment on Friday.
Egypt’s biggest listed bank said it received notification in a letter from the central bank of the decision to discharge Ezz al-Arab under a new banking law passed this year, but disclosed no further details.
The lender’s statement said it had held an emergency board meeting on Thursday and would review and investigate all issues raised by the central bank, adding that the board unanimously decided to appoint Sherif Samy as non-executive chairman.
The central bank said in a statement it had approved Samy’s appointment, and that he should be “well-placed to work on addressing the Central Bank’s regulatory compliance concerns and governance concerns that had been communicated to CIB on several prior occasions”.
CIB’s board had committed to formulate an “immediate corrective plan”, the central bank said, adding that it would monitor the situation closely.
CIB has substantial foreign holdings and is by far the biggest market capitalisation on the Egyptian stock exchange. The bank’s 2019 annual report said it accounts for more than 43 percent of the benchmark EGX30 index.
Ezz al-Arab, who was appointed chairman 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 had planned to step down as chairman and managing director last year but was asked by shareholders to continue for another 12 months.
“In view of the current situation with the Central Bank of Egypt, I have decided the time has come to end my journey with CIB,” the statement said.
Ahead of the CIB board meeting on Thursday, Egypt’s stock exchange said it had suspended the bank’s shares from trading after a request from the Financial Regulatory Authority (FRA). The exchange and FRA could not be reached for comment.
The bank’s global depository receipts (GDRs) in London fell as much as 41 percent on Friday morning before recovering to trade 13 percent up on the day. The GDRs fell 17 percent on Thursday.
A leaked copy of the central bank letter circulated on social media on Thursday said the central bank decided to dismiss Ezz al-Arab over alleged financial malpractice at the bank.
Reuters could not verify the letter or whether Ezz al-Arab had been the subject of any malpractice investigation. Ezz al-Arab was unavailable for comment.
CIB said in a conference call there had been no financial crime or fraud committed by the bank, according to an investor on the call.
Findings of a central bank audit of CIB would hopefully be known within a few days, CIB said.
Egypt’s private banking sector has gradually expanded over past few decades and the government has been more aggressive in privatising banks than in many other sectors.
The central bank has been planning to sell stakes in several banks it owns, including Banque du Caire, Egypt’s third-largest state-owned bank, but plans have been put on hold because of the COVID-19 pandemic.
By Patrick Werr
Additional reporting by Ehab Farouk and Nadine Awadalla in Cairo; Writing by Aidan Lewis and Rachel Armstrong; Editing by David Goodman and David Evans
Image: FILE PHOTO: The logo of Commercial International Bank is seen in Cairo, Egypt, July 30, 2017. REUTERS/Mohamed Abd al-Ghany/File Photo
