CBE Issues Regulatory Guidelines to Strengthen Risk Management, Operational Resilience

Egypt’s central bank (CBE) has reinforced its commitment to strengthening risk management frameworks and operational resilience across the banking sector, unveiling a series of regulatory measures designed to enhance financial stability amid evolving global and regional challenges.

Speaking on behalf of Governor Hassan Abdalla at the opening session of the 6th Annual Forum for Heads of Risk Management in Arab Banks—organized by the Union of Arab Banks and held in Sharm El-Sheikh—Assistant Sub-Governor Essam Omar emphasized that the Central Bank of Egypt (CBE) has proactively issued key supervisory instructions aimed at risk mitigation and operational continuity.

Among the most notable developments, Omar cited new regulations on operational risk management and the calculation of related capital requirements in line with the standardized approach. He stressed the critical importance of banks maintaining and regularly testing business continuity plans, noting that such measures are now mandatory across the sector.

A significant component of the CBE’s reform efforts includes recovery planning frameworks, designed to prepare banks for extreme financial events. These plans enable institutions to respond swiftly to losses that could otherwise impair their core functions within the financial system.

In the realm of cybersecurity, Omar revealed that the CBE has introduced the first edition of a sector-wide regulatory framework, establishing a comprehensive benchmark to assess the cyber readiness of all financial institutions under its supervision. Updates were also implemented to the centralized system for reviewing banks' digital applications, aligning it with the latest advancements in cybersecurity governance.

To further strengthen crisis preparedness, the central bank has issued emergency liquidity regulations, improved its supervisory auditing mechanisms, and developed early warning and intervention systems, along with procedures for resolving distressed banks.

Reflecting the broader trend of digital transformation, the CBE has also finalized licensing and supervisory frameworks for digital banks, aiming to expand access to banking services while managing associated risks effectively.

“In response to rapidly evolving banking risks and market developments, the Central Bank plays a pivotal role in supporting the continuous risk management process—both at the individual bank level and across the sector as a whole,” said Dr. Omar. He added that the central bank acts as an extension of the internal defense mechanisms within banks, ensuring compliance with capital adequacy, governance, and internal controls through its oversight functions.

Stressing the interconnected importance of financial and operational resilience, he noted that stability in the banking sector is foundational to broader economic health—particularly in emerging markets like Egypt.

He also highlighted the need for banks to adopt integrated risk visions, enhance their risk cultures, and harness advanced technologies to navigate a more complex risk environment effectively.

Presenting the latest financial soundness indicators, Omar pointed to a solid performance by Egyptian banks: the capital adequacy ratio reached 18.3% by the end of March 2025, significantly above both the CBE’s 12.5% requirement and the 10.5% Basel Committee standard. Liquidity coverage in local currency stood at a remarkable 853%, with foreign currency liquidity coverage at 188%. The net stable funding ratio across all currencies was 180%, well above the 100% regulatory threshold.

Furthermore, non-performing loans (NPLs) accounted for only 2.2% of total loans, reflecting the strong asset quality of Egyptian banks’ credit portfolios.

“These indicators demonstrate the remarkable resilience and strength of Egypt’s banking sector,” he concluded, underlining that the reforms and regulatory frameworks now in place provide a robust foundation for navigating future risks and sustaining financial sector stability.