UAE banks seek to obtain the largest share in the financing of projects in the Suez Canal region after the opening of the new canal.
Sahar El-Damati, Deputy Managing Director and CEO of the Risk Management sector of the Emirates National Bank of Dubai (NBD) asserted that the bank is ready to finance any projects offered for the development of the Suez Canal Axis. He added that it has the sufficient liquidity to invest in these projects, in both local and foreign currencies.
El-Damati said that the parent bank in UAE is excited to enter as a partner with the bank’s branch in Egypt to finance the projects.
She explained that Emirates NBD is not targeting specific sectors to finance among the Suez Canal projects. It is targeting all kinds of projects as part of its confidence that all the projects to be offered for the development of the Suez Canal Axis will be essential and basic for the Egyptian economy’s development.
It is expected that these projects will generate more than $100bn during the upcoming years, according to El-Damati.
She added that Emirates NBD did not wait for the offering of projects of the Suez Canal Axis development to confirm its confidence in the project. The bank participated earlier in the loan obtained by the Suez Canal Authority with a value of $100m, of a total estimated loan of $1bn.
The bank also entered into another loan that was arranged for the benefit of one of the companies working in the field of energy in order to buy and import equipment for the production of electricity in the Suez Canal region with an amount of $150m, including $90m from the parent bank in the UAE. Total value of the loan reached $282m, which emphasises the bank’s interest in the area.
El-Damati added that the bank’s role would not be limited to the financing of projects to be offered in the Suez Canal, as it will have another role in supporting Emirati investors who want to invest in these projects as well.
She said that most of these investors are clients of the bank, and are in a preparation phase to enter into a large number of projects. In the case of them needing financing, the bank will be ready and prepared to provide necessary help.
El-Damati expected economic activity in Egypt to increase, leading to an increase in the business of banks, especially after the offering of the Suez Canal development projects that will follow the opening of the new canal. She added that a major project like the development of the Suez Canal Axis is considered proof of the improved economic and political situations in Egypt.
The project will increase the Suez Canal revenues to about $13bn annually, compared to current annual revenues of $5.5bn, which will eventually increase foreign cash resources in Egypt, said El-Damati.
She stressed that Emirates NBD entered the Egyptian market in the second half of 2013 after acquiring BNP Paribas at a time when Egypt was experiencing difficult conditions. This shows the bank’s strong support for Egypt as well as its confidence in the Egyptian economy and its ability to grow. There are great growth opportunities in the Egyptian market, and an expected increase of the size of investments to be made, which will have an impact on the work of banks, leading to an increase of their activities, according to El-Damati.
El-Damati described the Suez Canal Development project as one of the most important projects in Egypt during this phase. It is also the first serious national project carried out by Egypt since the building of the Aswan High Dam due to its national value and positive impact on the Egyptian economy in general, in addition to its contributions in operating labour and combatting unemployment.
She added that, with the implementation of this project as well as the flow of investments in Egypt and the production increase, cash resources will increase as well, leading to a higher credit rating for Egypt and an improvement in the perspective through which foreign institutions view Egypt. This will attract more foreign investments to the Egyptian market.
El-Damati expected that all banks will be keen to finance the projects thanks to their economic feasibility. It is very possible that banks would contribute to some projects according to the basis set by the Central Bank of Egypt (CBE) for the banks’ investment in projects.