Hisham Ezz al Arab, the chairman and managing director of Commercial International Bank in Egypt, speaks to The National.
Q What are your priorities for this year?
A 2011 is an interesting year because the most important thing is to look after the customers. When I say looking after the customers, what I mean is there is not a single industry in Egypt that was not affected by the stagnation of productivity over the last month and a half. That stagnation will impact the cash flows and all banking business is based on a cash flow, either for an individual or a corporate.
You need to be sensible. If your occupancy rate went down to zero, we'll look at the cash flow and restructure it to when the season starts again in October or November, or even into 2012.
Q A lot of observers are worried about the impact of the turmoil on Egypt's economy, which was one of the faster-growing economies in the region. What is your outlook?
A There is a difference between an economic cycle and what we are going through right now. If it's an economic cycle, it's much more worrying. If it's company performance, it's much more worrying. When you're talking about stagnation due to major change in a country regime or structure, that's a different thing.
I always like to benchmark the country against other countries. The closest benchmarking is Turkey because of the population and the structure. Both Egypt and Turkey 10 years ago had almost the same GDP. Ten years later, Turkey because they had a national dream to join the EU, now their GDP is four times Egypt. This is the potential.
Q New investigations are being disclosed every week by the dozen. Was there corruption in the financial system?
A If you are talking about financial corruption like the old days, absolutely not. Giving loans for kickbacks and so on. That is behind us, even in the state banks. I can close my eyes and assure you on this. However, if you ask is there mismanagement in some cases, I can tell you yes. Mismanagement turns into corruption only when you know you are wrong and you choose to continue on with it.
Q What about the protests about disparity in wages across Egypt, including the banking sector? Is this something you are working to address?
A Banking people should be the last people to go on strikes. When we talk about minimum wages, it should be about people who get only 500 [Dh310] or 600 pounds a month.
When we talk about university graduates who get 5,000 pounds a month and they want to go on strike, that's a problem. When you find managers who get 10,000 or 15,000 pounds a month, and they want to strike for double then they have lost their sense of the poor people.
Every year, we do salary surveys, but the worst thing you can do is to make decisions under pressure because you want to take a populist position.
Q Even some of your customers are in jail or are facing investigations. What impact does that have on you? Does it reflect poorly on the bank?
A People are mixing up individuals and corporates. Banks deal with corporates. Individuals are shareholders in those companies. But banks don't deal with individuals as an individual.
The problem is if you put every businessman behind bars now because you think he is guilty, then the country will be paralysed. The number of unemployed people will multiply by triple. It is important to remember that the private sector represents 70 per cent of the economy and you have multiplier effect - each one who has a job has a chain of jobs behind him as well. This revolution didn't have a leader. This is something unique, but the bad thing about it is that if you had a leader you would hear him say that we are not here for revenge, we're here for change.
Q Your stock has declined significantly on the London Stock Exchange and other companies on the Cairo exchange are likely to see share prices drop when trading is resumed. What does that mean for Egyptian businesses?
A Generally companies will be too cheap. The business environment in Egypt has changed and will change. The issue of favouritism is behind us. That makes it very much a good, healthy business environment. So a country with 84 million people has all those resources and that potential, it can be part of the G20 [Group of 20 developed and emerging economies]. If I'm sitting at one of the international corporates, I would definitely and seriously look for targets within this country.
Being an ex-investment banker, when I see those thing happening I think "fantastic, you don't have a better chance than this".
Q When do you think lending will resume?
A Who will make new investments until you have a new government? We expect no new loans but we're working on the existing ones. I think the earliest would be after the presidential elections, which should be 60 days after the referendum on constitutional amendments on March 19.
What are protesters and new political parties telling you that they want to see in Egypt after they achieve political freedoms?
The main issue you want to deal with is how you make sure that Egypt has a transparent, level playing field. This means no favouritism, no red tape. Many of them are saying that if we have a national dream, then everything around it will be geared toward this dream, not to please the boss or the president. We need to institutionalise our life, rather than personalising our objective.
Many of them are against all those protests by groups in factories. They are very much against it. We did not make the change so that people could protest for personal gain in Tahrir [Square].
