An Egyptian administrative court will on Saturday study a lawsuit calling for the annulment of the sale of the Bank of Alexandria (BOA) to an Italian banking group six years ago.
In October 2006, 80 per cent of formerly state-owned BOA was sold to the Intesa Sanpaolo Group in a controversial deal that sparked widespread debate. Now, one group is demanding the bank be renationalised.
"The deal was shadowed by corruption, especially over an unfair valuation as it was sold at a share price of $12 while the fair market value at the time was $38," says Shehata Mohamed Shehata, manager of the Egyptian Centre for Transparency and Integrity, the organisation filing the case.
Before BOA was sold to Sanpaolo, the Egyptian government was obliged to restructure its debts, an expensive operation whose costs were barely recouped by the sale, claims Shehata.
"[The restructuring] cost the government LE9.2 billion while the bank was sold at LE9.5 billion," he says.
Shehata's group alleges that Sanpaolo afterwards sold 9.75 per cent of its BOA shares to the International Financial Corporation, an action that violated the sales contract it signed with the government.
Several employees of the Bank of Alexandria are planning to stage a demonstration in front of the State Council at the same time as the court sitting on Saturday, demanding the bank's renationalisation.
During the sale process, 13 international banking groups also made bids for BOA. Six were shortlisted for consideration, after which they carried out due diligence and presented final offers.
City Group International was the deal consultant, overseeing the due diligence procedures and carrying out a separate valuation, which was used as a benchmark in the sale negotiation, according to the BOA website.
Intesa Sanpaolo Group kept BOA's original trademark and name, as well as most of the management structure. The bank recently replaced Mahmoud Abdel Latif, chairman and managing director at the time of the sale, with Bruno Gamba.