This week, The United Bank of Egypt announced plans to sell 30% of its shares on the Egyptian Stock Exchange (EGX), opening the door for the public to own a piece of the bank. Owned by Egypt’s Central Bank, The United Bank is putting 330 million shares up for sale, a move that’s part of Egypt’s larger plan to divest from state-owned assets and bring in fresh investment. But what does this mean for you, and who really benefits from this sale? Let’s break it down.

What’s Happening with The United Bank?

The Central Bank of Egypt (CBE) currently owns The United Bank, and now, it’s giving up part of its ownership by selling shares to the public on the Egyptian Stock Exchange. The bank is waiting for final approvals from the Financial Regulatory Authority (FRA) and the Egyptian Exchange (EGX), and if everything goes smoothly, the sale could be complete by the end of 2024. This sale is being managed by CI Capital, a brokerage firm, with Baker McKenzie as the legal advisor.

This decision is part of Egypt’s broader initiative to list 32 government-owned companies on the stock exchange, inviting public and private investors to buy shares. The goal? To raise funds, modernize these companies, and boost economic growth.

Why Sell Shares? The Good and the Risks

The Upsides

Selling shares can be beneficial for several reasons. When a company “goes public,” meaning it sells its shares on the stock exchange, it can raise a significant amount of money. This new capital can be invested back into the bank, helping it expand services, improve technology, and even enhance customer experience. And by listing on the stock exchange, The United Bank will likely become more transparent and efficient—good news for customers and investors alike.

For Egypt, this sale aligns with the government’s plan to attract investment and reduce its direct involvement in businesses. By bringing in private and public investors, the government can focus on other areas of the economy while still supporting The United Bank’s growth.

The Downsides

On the flip side, selling shares also means the government gives up some control over The United Bank. With new shareholders involved, there’s always a risk that the bank may focus more on making profits for its investors rather than prioritizing affordable services for customers. Additionally, if the stock market is unstable or investor interest is low, the sale might not raise as much money as hoped, which could affect the bank’s and the government’s plans.

Who Benefits from The United Bank’s Share Sale?

The benefits of this sale extend to multiple groups, each in its own way:

1. The Egyptian Government

• Revenue Boost: By selling part of The United Bank, the government can raise money for other projects and investments.
• Lower Financial Responsibilities: With less ownership, the government won’t need to spend as much on supporting the bank, freeing up resources for other needs.

2. The Public and Investors

• Investment Opportunity: For everyday Egyptians and institutional investors, this sale is a chance to buy shares and own a part of The United Bank, potentially profiting if the bank does well.
• Dividends Potential: Shareholders could also receive dividends (a share of the profits) if the bank performs well financially.

3. The United Bank Itself

• Increased Capital for Growth: The money raised can be reinvested in the bank to expand services, improve technology, and maintain quality customer service.
• Higher Credibility and Transparency: A public listing boosts the bank’s credibility, which can help attract more customers and business partnerships.

4. The Egyptian Economy

• Stock Market Boost: Listing The United Bank on the EGX can draw in local and international investors, giving the economy a much-needed boost.
• Job Creation: If The United Bank grows as planned, it could lead to new branches, more job opportunities, and increased economic activity, which benefits communities and the national economy.

5. Future Private Sector Growth

• Encourages More Public Listings: A successful sale shows that Egypt is open for investment, which might encourage more companies to go public, supporting economic development.
• Setting a Model for Efficiency: If The United Bank’s listing goes well, it could push other companies to improve transparency and governance, raising overall standards in the economy.

What Does This Mean for You?

If you’re an Egyptian investor, this is an opportunity to own a stake in a major bank. For the general public, this move represents a step toward more private investment in the country, which could mean better services, more jobs, and a stronger economy. However, it also comes with the risk that The United Bank, with more private ownership, might focus on profits over customer needs.

Overall, this sale is part of a broader effort by the Egyptian government to create a more open and competitive economy by involving the public and private sectors. If successful, it could lead to a stronger, more resilient financial system that benefits everyone. However, it will require careful management to ensure that both public and investor interests are balanced, with a focus on long-term stability over short-term profits.