Talks between Egypt and Saudi Arabia about the purchase of the United Bank, owned by the Egyptian government and based in Cairo, have been stalled due to a dispute between the two sides over the bank's evaluation process, at a time when Egypt - which is facing a crisis in dollar liquidity - seeks to provide foreign exchange to finance its needs.
Last year, the Public Investment Fund (the Saudi sovereign fund) began talks with Egypt regarding the purchase of The United Bank, within the framework of the Kingdom’s pledge to provide $10 billion to boost Egypt’s finances. The sale of The United Bank is estimated at about $600 million, according to Bloomberg Agency.
Yesterday, Wednesday, Bloomberg quoted sources familiar with the talks as saying that the dispute relates to calculating the value of the Egyptian pound, which continues to decline.
The sources added that the Saudi Public Investment Fund wants the United Bank to be evaluated in Egyptian pounds, provided that the value of the deal is calculated in dollars at the time of its completion, while the Central Bank of Egypt wants the United Bank to be evaluated from the beginning in dollars.
Egypt devalued its local currency 3 times in nearly a year, so that the currency is currently trading at about 30.53 pounds per dollar, down from about 15.8 pounds per dollar last March.
The devaluation came as Egypt is witnessing a crisis in saving the dollar after the Russian-Ukrainian war due to the flight of hot money, which was a major source of hard currency for the country, which relies heavily on imports to meet its main needs.
Yesterday, Reuters news agency quoted well-informed sources as saying that Saudi Arabia had suspended the plan to buy The United Bank.
The United Bank was established in 2006, and it owns about 70 branches and 225 ATMs across Egypt, according to its account data on LinkedIn.
