The National Bank of Egypt (NBE) stands as the oldest commercial bank in Egypt, with a rich history deeply intertwined with the nation's economic and political development. Established on June 25, 1898, with a capital of £1 million, NBE's functions and roles have continually evolved to align with the different economic and political stages in Egypt.
Throughout its long history, NBE’s functions and roles have continually developed to square with the different economic and political stages in Egypt. During the 1950s, NBE assumed the central bank’s duties. After its nationalization in the 1960s, it acted as a pure commercial bank besides carrying out the functions of the central bank in the areas where the latter had no branches.
The Founding of the National Bank of Egypt
1898 is a landmark year in the history of Egypt's economy. Sixteen days after it was incorporated in London, from his Alexandria Palace of Ras al-Teen Abbas Hilmi II rubber stamped a landmark decree on 25 June 1898, creating the National Bank of Egypt. Actually, the bank had already been incorporated on June 9 by the Daira's new owners. In so doing, close observers remarked the khedive had initiated Egypt's embryo central bank.
On June 21 the Egyptian government sold the Daira Sania Estates, the country's largest state run agro-industrial company to an international consortium led by Cassel for the sum of 6,431,500 sterling, representing the Daira's outstanding liabilities. This singular transfer of ownership and control from a state-owned enterprise to the private sector would change the economic and social face of Egypt for at least the next 60 years. The actual kickoff started four days after the sale when, at Alexandria's Ras al-Teen Palace on June 25, 1898, Egypt's nominal ruler Abbas Hilmy II, rubber-stamped the decree creating the National Bank of Egypt.
During the 25th of June [4] 1898, Sir Ernest Cassel (50% ownership), the three brothers Joseph Suares (1837-1900), Raphael Suares (1846-1909) and Felix Isaac Suares (1844-1906),[5] Moise Cattaui (25%) and Constantine Salvagos of Alexandria (25%) established the National Bank of Egypt (NBE), though Cassel remained in England.
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Capitalized at one million pounds the colonial bank's main purpose was to provide the means of channeling finance to development projects and, to attract British capital and enterprise.
Key Figures Behind the Bank
Several key figures were instrumental in the establishment and early success of the National Bank of Egypt:
- Sir Ernest Cassel: National Bank of Egypt's largest founding shareholder, was a German Jew-turned-gentile who adopted England as his new homeland. With the blessings of Whitehall in London and Lord Cromer in Cairo, Sir Ernest Cassel put up 50% of the National Bank of Egypt's founding capital ensuring Britain a lion's share of all new major capital investments in Egypt. His connection to Egypt stemmed from an early apprenticeship at the Anglo-Egyptian Bank in Paris. Trampling on old-fashioned conventions, he became the richest man in England and advisor to King Edward.
- Raphael Suares: The son of an immigrant Jew from Leghorn Italy, built for himself a financial empire in Cairo. Through his bank Suares Freres & Cie., Raphael Suares subscribed to 25% of National Bank of Egypt's founding shares. In time, Suares became the khedive's financial advisor. Besides their interest in railway transport, the Suares brothers were the largest family-run urban real-estate developers in Cairo.
- Constantine Salvagos: Who, like Suares, put up 25% of the new bank's capital, was an immigrant from the Dodecanese Iland of Chios. Now, come to increase their numbers was one Constantine Salvagos, a textile merchant from the island of Chios by way of Marseilles. He had heard of Egypt's cotton boom prompted in large part by the American Civil War and had come to stake his claim of the spoils.
The combined influence of German-born Sir Ernest Cassel of London, banker Raphael Suares of Cairo and Constantine Salvagos of Alexandria, guaranteed the success for the National Bank of Egypt.
Early Operations and Expansion
Britain meanwhile, actively pursued a stringent policy of fiscal reforms aimed at enhancing investments in land, irrigation and transport, with the hope of setting off a splurge of capital accumulation. Because the National Bank was a pivotal component of these socio-economic reforms, it was of paramount importance to legitimize its position as an 'Egyptian' bank by recruiting local partners.
In 1901 NBE opened a branch in Khartoum. It obtained a privileged position as banker to and for the government and acted as the semi-official central bank. In 1906 NBE established the Bank of Abyssinia in Addis Ababa.
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Everything proceeded so satisfactorily that in 1902, the National Bank of Egypt created the Agricultural Bank.
Evolution and Nationalization
Up until its nationalization in the late 1950s, the National Bank of Egypt answered to a board of directors and its elected governor. From Sir Elwin Palmer in 1898 down to Sir Edward Cook in 1940, the bank's chief executive was always British which led critics to observe that not only was it a colonial bank, but its membership was closed to all but the cream of the English rank and file in Egypt. In a sense they were not far off. This was no rags to riches bank that grew because of ordinary depositors' savings. This was a trail blazing institution which, from its outset, was meant to serve British trade and colonial interests.
It was only when, on his own merit, former finance ministerAli Chamsi Pasha became the bank's first Egyptian president in 1940 that the "Egypt" in the bank's name started to mean something.
The bank did not have to wait long to loose its prestige as the oldest and most important central bank in the Middle East. First to go was the sedate atmosphere when the bank's Pall Mall clubiness disappeared once the original rococo headquarter, built in 1900 by architect Dimitri Fabricius Bey, was replaced by what is today the Central Bank of Egypt, at the corner of Cherif and Kasr al-Nil Streets. Then came the double whammy when the bank was nationalized and a new central bank created. The knockout blow came with the demise of the private sector following the promulgation of the socialist laws in July 1961.
Ayman Badr ElDin Ahmed Gamgoum, Head of Branches Group at National Bank of Egypt | SVIC Testimonial
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Modern Era
Several key events shaped NBE in the latter half of the 20th century:
- 1961: Citibank sold to NBE its Egyptian assets and liabilities.
- 1987: Chase sold its shares in CIB to NBE and CIB changed its name to Commercial International Bank, SAE. Partial privatization in 1993 and a GDR issue in 1996 reduced NBE's share to 34%.
- 2005: NBE acquired Mohandes Bank, which had been established in 1979 as a commercial bank.
As of 2007, the National Bank of Egypt accounted for 23% of the Egyptian banking system's total assets, 25% of total deposits and 25% of total loans and advances. NBE also financed about 24% of Egypt's foreign trade during the year.
During the period from July 1st, 2020 to December 31st, 2021 (18 months), NBE managed to achieve unprecedented performance indicators. Total financial position as at the end of December 2021 recorded EGP 3.3 trillion, growing 60.2% against the end of June 2020. Accordingly, NBE’s total assets accounted for 37.5% of Egyptian banks’ total assets. Total deposits reached EGP 2.4 trillion as at end-December 2021, with a growth rate of 50% against June 2020, accounting for 37.1% of total banks’ deposits. Such leap was driven by the introduction of a diversified package of deposits in local and foreign currencies at competitively lucrative rates.
NBE is the oldest commercial bank in Egypt.
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