Regulatory Alerts2016-04-20
A circular dated March 7, 2016 amending the rules and regulations of bank financing for the acquisition of companies
## (The Third Article) Raising the risk-weighted assets for shareholding transactions is calculated based on the following: (a) Up to 200% in relation to equity investment activities from strategic investors, which refers to the bank seeking such acquisition operating in the same sector as the acquiring bank or completing the transaction through companies or funds controlled by the acquirer. In this case, at least 40% of the shareholding will be financed through loans. (b) No more than 5% of the total loan portfolio of the bank may be lent to one individual customer or related parties for such transactions. ## (The Fourth Article) It is prohibited to increase the overall financing for takeover activities above 2.5% of the total loan portfolio of the bank upon issuance, and no party may borrow more than 5% of their total loan portfolio from the bank or related parties. ## (The Fifth Article) Banks are required to obtain a resolution by the Central Bank of Egypt's Board of Directors regarding guidelines for assessing risk. ## (The Sixth Article) In accordance with the provisions and regulations contained in the aforementioned resolution, banks must take into account the rules governing shareholding transactions, and banks that have previously financed such transactions shall rectify their conditions within six months from the date of this law, in accordance with these rules. ```haxl : 54 sha : The Qahirah 2733 : Main Office: 2770-2733 : Fax: 259-760-35 ```