HSBC has agreed to sell its entire Egyptian retail business to Emirates NBD — roughly 143 billion pounds in deposits, a branch network, and one of the most affluent customer books in the market. HSBC walks away with an estimated $300 million gain and keeps its corporate and investment banking presence. At least four banks competed for this book. Joining us is Dr. Mina Beshara, Group CFO of Pharma Overseas. Doctor Mina, welcome back.
Thank you for having me again.
When a retail portfolio like this changes hands — what is Emirates NBD actually buying, and why is a book with 143 billion pounds in deposits but only 19 billion in loans so valuable to an acquiring bank?
For Emirates NBD, I think they are tracing the steps CIB took around ten years ago when they acquired Citibank Egypt's operations. CIB grew to become the largest private commercial bank in Egypt and third overall. Emirates NBD have been growing their Egyptian operations, and this acquisition is one of the fastest ways to scale. Instead of building branches, renting spaces, and acquiring customers one by one — you acquire the client base, the deposits, the payroll accounts, the debit and credit cards, everything. For HSBC, it is a profitable sale because they are maintaining their institutional presence in Egypt — they are one of the largest in corporate lending. The retail business, by contrast, requires major investments in IT, infrastructure, branches, and people. So they are reallocating that capital while still making a profitable exit. For Emirates NBD, it is a very profitable deal.
Does the fact that HSBC is selling a unit that made nearly one billion pounds last quarter change anything?
No — it actually gives them a higher valuation in negotiations. And it confirms this is a very profitable sale. For everyone else, it is the shortcut to growth. Even CIB was interested because Egypt keeps growing. The population is growing, consumer credit demand is growing, and banks have easy access to treasury bills yielding around 26% before tax for any excess liquidity. There is no reason for any bank to think about exiting this market. HSBC is not exiting — they are reforming and focusing on what matters more to them.
Four institutions conducted due diligence on this book — including listed CIB. What does that level of competition tell investors about how banks are valuing Egyptian deposits right now?
It tells you banks are growing revenues and profits by double digits every year. Abu Dhabi Islamic Bank grew revenues by 27% and net profit by 22%. CIB makes tens of billions in net profit annually. Even the largest public banks, despite their role in providing government-mandated high-rate certificates, are reporting hundreds of billions in profits. A catch like HSBC's — with its network of premier accounts, dollar accounts, payroll clients, and corporate relationships — is a very attractive investment for any of these banks. The reality is probably that around 20 banks would have loved to do this deal. Only four had the financial capacity to actually go through with it.
For viewers holding Egyptian bank shares — CIB bid and lost. When Citi sold its retail book to CIB in 2015, what did that transaction do for CIB's franchise, and what is the read-across for listed banks this time?
Eleven years ago when CIB did that deal, they were around sixth or seventh in Egypt. African Investment Bank was larger. National Bank was larger. Ahli Msr and Banque Misr were larger. But adding tens of branches, hundreds of thousands of customers, and the Citibank premium franchise was the shortcut. It is costly — but it is better than spending the next four or five years trying to acquire those customers with expensive offers. You have the network, you have the clients — you plug in and play. That is why CIB became the third largest bank in Egypt within a few years. Emirates NBD is chasing those same steps. They are probably targeting a top five position in Egypt through this move.
This is Emirates NBD's second major acquisition this summer, after taking control of India's RBL Bank. Gulf capital has now absorbed Bank Audi, Blom, and HSBC's retail book in Egypt. Is Egyptian banking becoming a Gulf capital story — and is that a strength or a concentration risk?
There is no concentration risk. You have Gulf banks that want to invest in Egypt because it is a very attractive market — over 60 million bank accounts, strong financial inclusion momentum, and everyone now encouraged to open a bank account or wallet. Banks should compete for those individuals because capturing a customer means capturing their loan, their overdraft, their card, their transactions, their payroll — everything. HSBC was very strong on that. Emirates NBD will now complete their picture by adding the retail side to the corporate strength they already have. The same logic applied in India. They are targeting markets with huge customer bases. It is a catch for them.
Doctor Mina, thank you very much for helping us understand this banking story. It has been a pleasure.
My pleasure. Thanks so much.
