CBE Exempts Banks from Credit Concentration Limit for 50 Largest Customers

The Central Bank of Egypt (CBE) confirmed extending the exemption of banks from applying the limits of the credit concentration on bank portfolios with the largest 50 customers and the parties associated with them until the end of December 2022.

CBE added that this came to support banks to play their role in supporting the various economic sectors, especially with the continuing impact of the repercussions of the coronavirus.

The central bank issued instructions at the beginning of 2016, stipulating the formation of additional risk weights of up to 200% in case the credit facilities granted to the largest 50 customers exceed 50% of the credit portfolio, and 300%, if the aforementioned ratio exceeds 70% of the total credit portfolio to the bank.

Thus, it is the third time to extend the decision after the bank extended the exemption of banks from the procedures for credit concentration for the second time for the largest 50 clients, which ends in December 2021.

The decision enhances the ability of banks to cope with economic shocks that arise as a result of the current conditions of inflation, disruption of supply chains, and the spread of the new variant. Historically, about 9.8% during the first quarter of the current fiscal year.

It also enables it to support major companies by providing new loans to finance their various investments and expansions, thus enhancing the growth rates of the Egyptian economy, which recorded a historical level of 9.8% during the first quarter of the current fiscal year.

Credit concentration measures how well persified a bank's lending is. ... That is, what portion of their overall lending is owed to the bank by its 50 largest customers compared to the total amount of capital it has. This is to assess whether any one customer poses a risk to the overall stability of the bank.