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The Banking Law is Amended With Res

The Banking Law is Amended With Respect to Central Bank Board
Board Members Reduced in Number and Conflicts are Avoided In October 2011 Decree/Law Number 125 of 2011 was issued by the Supreme Military Council (Official Journal – Issue No.40 (bis), October 8th, 2011) amending certain provisions in the Banking Law No. 88 of 2003, as follows: • The reduction in the number of members of the Board of Directors of the Central Bank of Egypt from 15 to 9 (the Governor and two Deputies, the Chairman of the Egyptian Financial Supervisory Authority, a representative of the Minister of Finance, and four experts). • The addition of a new condition to the requirements of Board members, namely that none of them has “interests that conflict with their duties or the requirements of neutrality and independence and confidentiality of information they acquire as members of the Board of Directors of the Central Bank, and that they are not chairmen or members of boards of directors of commercial bank or finance companies or employees therein, or provide any professional or advisory services thereto”. The outcome of this amendment is that members of the Central Bank Board can no longer be members of the boards, or employees of commercial banks, investment banks, mortgage companies, insurance companies, leasing companies or any other financial institutions. Comment The new provisions provide the highest level of avoidance not only of actual conflicts but also of potential or perceived ones, which is a protection to the Central Bank and a response to public opinion. However, they will deprive the Central Bank from the talents and practical expertise of practitioners in bank management, as well as practical legal and accounting skills, and will force the Bank to rely exclusively on academic credentials. In the last week of November, the Chairman of the Supreme Military Council issued three Decrees – Number 246, 247 and 248 (Official Journal – Issue No. 47, November 24th, 2011) renewing the appointment of Dr. Farouk El-Okda as Governor, appointing Gamal Negm and Lobna Hilal as Depity Governors, and appointing a new board consisting of Dr. Ashraf El-Sharkawy (in his capacity as head of the non-bank financial supervisor), Momtaz El-Said (representative of the Ministry of Finance), in addition to Dr. Mahmoud Abdel-Fadil, Councilor Motaz Kamel Morsy, Dr.LailaEl-Khawaga and Dr. Alaa El-Shazly (all as experts). The said appointments are for a four-year term starting November 27th, 2011 and ending November 26th, 2015. The new Board composition is in compliance with the latest amendment in the Banking Law No. 88 of 2003 – which amendment was issued by Law No. 125 of 2011 – and which stated that no member of the Central Bank Board could have real or potential conflicting interests with the Board membership. This amendment also reduced the number of Board members from 15 to 9, all of whom are not conflicted.
Board Members Reduced in Number and Conflicts are Avoided In October 2011 Decree/Law Number 125 of 2011 was issued by the Supreme Military Council (Official Journal – Issue No.40 (bis), October 8th, 2011) amending certain provisions in the Banking Law No. 88 of 2003, as follows: • The reduction in the number of members of the Board of Directors of the Central Bank of Egypt from 15 to 9 (the Governor and two Deputies, the Chairman of the Egyptian Financial Supervisory Authority, a representative of the Minister of Finance, and four experts). • The addition of a new condition to the requirements of Board members, namely that none of them has “interests that conflict with their duties or the requirements of neutrality and independence and confidentiality of information they acquire as members of the Board of Directors of the Central Bank, and that they are not chairmen or members of boards of directors of commercial bank or finance companies or employees therein, or provide any professional or advisory services thereto”. The outcome of this amendment is that members of the Central Bank Board can no longer be members of the boards, or employees of commercial banks, investment banks, mortgage companies, insurance companies, leasing companies or any other financial institutions. Comment The new provisions provide the highest level of avoidance not only of actual conflicts but also of potential or perceived ones, which is a protection to the Central Bank and a response to public opinion. However, they will deprive the Central Bank from the talents and practical expertise of practitioners in bank management, as well as practical legal and accounting skills, and will force the Bank to rely exclusively on academic credentials. In the last week of November, the Chairman of the Supreme Military Council issued three Decrees – Number 246, 247 and 248 (Official Journal – Issue No. 47, November 24th, 2011) renewing the appointment of Dr. Farouk El-Okda as Governor, appointing Gamal Negm and Lobna Hilal as Depity Governors, and appointing a new board consisting of Dr. Ashraf El-Sharkawy (in his capacity as head of the non-bank financial supervisor), Momtaz El-Said (representative of the Ministry of Finance), in addition to Dr. Mahmoud Abdel-Fadil, Councilor Motaz Kamel Morsy, Dr.LailaEl-Khawaga and Dr. Alaa El-Shazly (all as experts). The said appointments are for a four-year term starting November 27th, 2011 and ending November 26th, 2015. The new Board composition is in compliance with the latest amendment in the Banking Law No. 88 of 2003 – which amendment was issued by Law No. 125 of 2011 – and which stated that no member of the Central Bank Board could have real or potential conflicting interests with the Board membership. This amendment also reduced the number of Board members from 15 to 9, all of whom are not conflicted.