Postponing the deduction of additional impairment losses calculated for owning shares in non-financial companies whose value exceeds 40% of the company’s issued capital.

Dear Mr. Chairman of the Board of Directors,

Bank

Greetings,

I would like to refer to the decision of the Board of Directors of the Central Bank of Egypt in its meeting held on September 8, 2009, regarding the measurement of additional impairment losses on the value of shares that the Bank owns in non-financial companies whose value exceeds 40% of the company's issued capital, and their recognition in the income statement, as stated in the decision. And given the direct impact of those instructions on the profitability of banks and the desire of the Central Bank to alleviate the burdens on banks at this stage and preserve the integrity of their financial positions for the purpose of managing the current crisis, the Board of Directors of the Central Bank of Egypt decided in its meeting held on April 12, 2011, the following:

"In the event that a bank owning shares in a non-financial company exceeding 40% of the company's issued capital is unable to dispose of this excess within one year from the date of acquisition, the additional impairment losses on the value of these shares shall be measured according to the prevailing accounting rules, such that the value of these losses is not less than the equivalent of the amount of the excess over 40% of the company's issued capital, and the value of these losses shall be recognized in the income statement under the item of profits (losses) from financial investments or the item of other operating revenues (expenses) depending on the case, in exchange for reducing the book value of the shares by the value of these losses. This treatment shall apply as of July 1, 2012, for banks issuing their financial statements at the end of June of the following year, and for all new cases of acquisition that became property of the bank in satisfaction of debt and have been held for one year from the date of acquisition."

This is subject to compliance with the determinations contained in Circular Letter No. 108 dated October 5, 2009, B, in addition to the following:

1) The impact of the value of additional impairment losses shall be reflected in the income statement of the bank prepared for the first financial year following the date mentioned in the decision (July 1, 2012).

2) The above shall not apply to additional impairment losses that were deducted from the income statements prepared for the fiscal year ending December 2010.

Please be kind enough to take the necessary action in this regard.

And please accept our highest regards,

Gamal Naguib