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INTERVIEW-Morocco's Attijariwafa to fund Barclays Egypt buy at home
October 10, 2016 / 7:51 PM / 10 months ago

INTERVIEW-Morocco's Attijariwafa to fund Barclays Egypt buy at home

RABAT, Oct 10 (Reuters) - Morocco's Attaijariwafa Bank is planning to fund its purchase of Barclays' Egypt, which it expects to close by the end of the year, through local financing deals, its Managing Director Ismail Douiri told Reuters.

Britain's Barclays, which completed the sale of its Egyptian unit to Attijariwafa last week, did not give a price for the transaction, but sources previously told Reuters they valued the business at around $400 million.

Attijariwafa is looking at capital increases, dividend management and a reorganization of its shareholdings to finance the Barclays deal and will use foreign reserves, with no plans for international bonds or bilateral foreign deals, Douiri said.

"It will be between us and in house, we have enough resources even if the closing happens before the end of the year, as we expect it," he added.

Attijariwafa said the deal will not impact its counterparty risk profile as Egypt's banking sector has almost the same risk as Morocco, with around 7 percent of non-performing loans (NPLs) and for Barclays' Egyptian business this figure is only 4.7 percent, reflecting its conservative approach.

Attijariwafa's consolidated NPLs were 7.1 percent in the first half of 2016, the same as in the first half of 2015.

Like other big lenders in Morocco, the bank has faced higher risks in sub-Saharan Africa where it has been developing aggressively, and bad loans in its home market after years of economic turmoil following the financial crisis and Arab spring.

Attijariwafa has subsidiaries in Tunisia, Ivory Coast, Senegal, Mauritania, Mali, Cameroon, Gabon and Congo Brazzaville, plus branches in Europe.

However, Attijariwafa's Douiri acknowledged short-term risks linked to Egyptian currency and interest rate volatility, with growing speculation the country's central bank could devalue the pound to close the gap with the black market rate.

"Analysts expects Egypt's central bank will devalue the pound and we have taken it into consideration in our price."

Barclays Egypt will represent 5 percent of Atiijariwafa's assets, and will add 13 percent to the bank's profit attributable to shareholders. The Moroccan bank reported last month a 7.9 percent rise in its 2016 first-half net profit to 2.49 billion dirhams ($260 million).

Islamic Partner

As well as completing the Barclays deal, Attijariwafa was in advanced talks to partner with the Islamic Development Bank (IDB) to launch an Islamic subsidiary in Morocco.

Morocco's central bank has said it would start issuing approvals for such banks this year, with the aim of allowing them to begin business in early 2017.

Douiri said IDB will be a technical partner with a minority stake of between 10 and 20 percent.

Attijariwafa's Islamic unit, Dar Assafaa, has been the only window selling Islamic products since Morocco began allowing conventional banks to offer a limited set of Islamic financial services in 2010. It has 16 branches and it is planning to open three others by the end of 2016, Douiri said.

Islamic finance -- called participative products in Morocco would stay at between 5 and 10 percent of the Moroccan banking market -- but this will depend on competition and the way it is communicated to the bank's customers, Douiri said.

"We will have to be careful to not mislead customers because if they feel disappointed it will be even less than 5 percent," he said. "Some in Morocco think it is a miracle. Participative products conform to Islamic rules, but they do cost money too." (Editing by Alexander Smith)

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