The Central Bank of Egypt (CBE) has canceled the operating licenses of seven exchange companies due to difficulties in complying with capital-related regulations.
This development was confirmed by Ali Al-Hariri, the Head of the Exchange Companies’ Coordinating Council in the General Federation of Chambers of Commerce, along with three other sources from two different exchange companies who spoke to “Al-Sharq”.
Earlier this year, the Central Bank issued directives mandating that the minimum capital for each branch of exchange companies should not be less than EGP 5 million.
Additionally, a law issued by the Central Bank and the Banking System in September 2020 requires that the capital of any exchange company should not be less than EGP 25 million.
The affected companies, as listed by Tamer Shaker, a former member of the Exchange Division and the head of the now-closed Golden Marriott company, are Al-Israa Exchange, Golden Marriott, Al-Noor, Misr Cambio, Roxy International, Cairo Switzerland, and the British Company. This was also confirmed by Ali Al-Hariri.
The closed exchange companies collectively owned 17 branches, according to archival data published by the Central Bank on its website. The Central Bank did not respond to “Al-Sharq’s” inquiry about the decision.
Al-Hariri stated that the seven companies have resorted to the administrative judiciary to challenge the banking law, which requires them to increase their capital to a minimum of EGP 25 million.
This requirement, according to them, does not take into account the market conditions and the successive losses the exchange market has faced since the COVID-19 pandemic, through the Russian-Ukrainian war, and the ongoing foreign currency crisis in the country, leading to a decline in the official currency market activity in favor of the parallel market.
“The minimum capital requirement for an exchange company is a significant amount given the challenging market conditions. Moreover, mergers between companies will be difficult due to current losses and lack of necessary liquidity,” Al-Hariri added.
According to the latest data available on the Central Bank’s website, the total number of exchange companies operating in the Egyptian market decreased to 43 by the end of December 2022, down from 54 at the end of December 2021.
However, the head of the Coordinating Council for Exchanges noted that the current number of operational exchange companies in the Egyptian market is now 26 following the latest decision, excluding companies that voluntarily closed over the year due to financial situations and market conditions.
Ownership of exchange companies operating in the Egyptian market varies between those affiliated with the government and private banks, which have strong capital and geographical spread, and those owned by individuals, which face significant challenges in complying with the increased capital requirements.
