Regulatory Alerts2022-04-28 | CBE4.1.3Added · Updated
CBE Regulation Book 4.1.3 - Banking Financing Controls For The Acquisition Of Companies, And Valuation Of Goodwill
The Central Bank of Egypt imposes specific controls on banking financing for the acquisition of companies, including a risk weight increase to 200% for strategic acquisitions and 400% for private equity or venture capital transactions. Total financing for acquisitions is capped at 2.5% of the bank's total loan portfolio, with single client limits set at 0.5%, and aggregate funding for any single acquisition limited to 50% of the transaction value unless approved otherwise. Banks must adhere to strict valuation standards for goodwill, requiring independent appraisals and comprehensive financial and legal due diligence, while existing financed acquisitions must be brought into compliance within six months.
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