Company Analysis of Free Standing Company - National Bank of Egypt - Essay Example

BANK OF EGYPT AS A FREE STANDING COMPANY Introduction: In international business arena free standing business in general can be defined as a foreign investing company that has headquartered situated in one country and its businesses are spread to other countries as well. In simple words an alien business that has its headquarter situated at parent country and its business activities are performed in other countries as well (Wilkin, and Schroter, 128). Usually free standing companies generate funds from the parent country and invest these funds in the other country in order to gain maximum benefits from the environment of other countries. This report will analyze National Bank of Egypt as a free standing company and then the characteristics of National Bank of Egypt will be compared with the views of Mira Wilkin with respect to free standing company. Past and Present of the National Bank of Egypt (NBE) and its Acquisitions and Mergers (as a free standing company): National bank of Egypt is not only the oldest bank of Egypt but it is also the oldest commercial bank of Egypt. It has been operating for the last 114 years. The bank was established in June, 1898 with the investment of one million pounds (National Bank of Egypt a). It is believed that bank of Egypt was formed by partnerships of various important people namely, Sir Ernest Cassel, Isaac Suarez and his siblings Joseph and Felix and various other members. However since Sir Ernest was keen on not leaving United Kingdom therefore branch office of National bank of Egypt was created in London (National Bank of Egypt UK Branch) Since then National Bank of Egypt has opened various branches around Egypt and some other countries of the world. It has opened its branch in Khartoum in 1901, and in next year Agriculture Bank of Egypt was set active. Similarly it has merged with various other banks and also has acquired many banks around the globe to capitalize on different opportunities regardless of the geographic region. National Bank of Egypt has a rich history of these mergers and acquisitions and some of these have been discussed below. Bank of Abyssinia came into being in 1906 and was established by National Bank of Egypt, which in many ways performed its duties for the Ethiopian government. This bank has also issued currency for Ethiopia and was the only issuer of currency for the government. Moreover Bank of Abyssinia has also provided its services as a fiscal agent for the Ethiopian government. However these services were later terminated in 1931 as Ethiopian government established bank for Ethiopia as an alternative, this new bank was named as Bank of Ethiopia. In the year 1951, National bank of Egypt was recognized as the central bank for Egypt, but it was later confirmed in 1957 (by banking acts) and started its operation as a legal central bank of Egypt. Another important development by National Bank of Egypt was that it started operating in Sudan; all assets of the bank which were in the premises of Sudan were intentionally nationalized by the Sudan government in order to come up with the new bank for the country. This was later named as central bank of Sudan. Similarly after a year (1960) Bank of Egypt was also nationalized. The main purpose for this act was to create a separate central banking entity for Egypt (Egypt News). National Bank of Egypt acquired Citibank of Egypt in 1961, as this bank entered the Egyptian market 6 years before its acquisition. However the prime reason for Citibank to leave the market was because of the nationalization process carried out in the Egypt. Furthermore one of the important milestones of Bank of Egypt was to establish Commercial International Bank. With the help and partnership of Chase Manhattan Bank or in simple words the merger between National Bank of Egypt and Chase Manhattan Bank has resulted in establishing Commercial international Bank in the year 1975. Likewise after a year (1976) another important merger came into existence, As NBE along with 19 other banks from US and Arab merged together in order to establish Arab American Bank . However National Bank of Egypt established its branch in the United Kingdom in the year 1982, which worked as a subsidiary branch. Furthermore in the year 2000 another branch was established in U.S. (New York) whose prime purpose was to take over Arab American Bank in terms of businesses (National Bank of Egypt New York Branch). Likewise in the year 2005 Mohandas Bank was bought by NBE and in 2006 Dubai was chosen by NBE in order to establish their representative office. Similarly in 2008 National Bank of Egypt opened its branch in Shanghai. The bank has also recently introduced ecommerce solution in order to satisfy customers after analyzing the increasing penetration of internet in the country (El Areeny). The bank has improved its risk management system over the years and its international credit rating is ‘B’ (Egypt News). Moreover, the bank has set target to minimize bad debt portfolio to EGP 5 billion by the end of this fiscal year as said by Yehya Abou El Foutoh, head of bad debts department (Serour). Bad debts were having a share of 30% which would be reduced to 5% only and it is a positive sign for the bank (Serour). Global Network of National Bank of Egypt (NBE) as a free standing company: National Bank of Egypt is amongst the top banks of Arabia, as its network is spread all over the country with more than 258 branches in the Egypt, and this makes it the biggest bank of Egypt. Furthermore in terms of international presence, NBE has great presence in the international market as well; various branches are prime factor in this regard (National Bank of Egypt c). For instance the National Bank of Egypt (United Kingdom) Ltd, branches in New York and Shanghai show its international presence. To add more NBE’s representation offices around UAE (Dubai), South Africa (Johannesburg) and in Ethiopia (Addis Ababa) are some of the other key assets of National Bank of Egypt which shows his strong international presence. This is not all; NBE is further garnering its international presence, as its prime target is Africa, as National Bank of Egypt is collectively working with the government of Sudan where this bank is working in affiliation with National Bank of Egypt-Sudan. Important roles and functions of National Bank of Egypt (NBE): National Bank of Egypt has evolved with the passage of time, its roles and functions have changed with time in the past and up to some extent this trend is still in progress. NBE has faced different economics situations and has very succinctly answered all the situations very well. For instance during 1950’s NBE was assigned the duties to work as Central Bank of Egypt (in 1960’s), its role changed dramatically when NBE was nationalized later, at that time NBE worked as a commercial bank as well. The bank has also worked as a subsidiary branch giving services in those areas where Central Bank of Egypt had no branches (National Bank of Egypt d). Furthermore it is facilitating masses and working as a prime player in terms of managing and issuing saving certificates as the ally of government. This shows the maturity and different roles that NBE has played over the passage of more than 100 years. However these roles are confined nationally, broader analysis or international analysis has already done above. Moreover, the National Bank of Egypt is also helping Egypt to receive more investment from different parts of the world. In 2012, it facilitated China Development Bank in making investment in Egypt and it has been said that China Development Bank will invest $200 million USD in Egypt (Al-Youm, 2012). Not only this, the bank has facilitated investment to private sectors as well. El Taweel has said that NBE would arrange 420 million USD for Mobinil, Egyptian Mobile Company. Moreover, the bank is also facilitating investment in attracting tourists to the country as well. It has provided EGP 1 million to hotels to upgrade their facilitates in order to improve tourism in the country as said by Abdelazim, a reporter of Daily News Egypt. The bank has also helped the government to sell certificates and to attract more deposits. In April, 2012 NBE sold three year certificates to Egyptians living abroad to collect more funds (Werr). The bank has also issues Islamic Bonds to raise funds and to help the country recover from the crisis (Reuters) Comparison or linkage with other similar type of businesses: National Bank of Egypt is amongst the banks that have been working as a free standing company, however there are various other banks that are performing their duties in the same fashion. For example Royal Bank of Canada (RBC), and Industrial and Commercial Bank of China Limited (ICBC) are the other two examples of banks that fall in the same category. However their functions or role may slightly differ, but the overall functions remain the same. As all three banks have their investments in foreign countries and are operating several businesses in different parts of the world. Some businesses are strictly related with providing banking solutions while others are purely on different dimensions. Consider the example of Industrial and Commercial Bank of China which has its operations in the different walks of life. Majority of the operations however are in banking line, one notable business that ICBC invests in is the (precious) metal business (ICBC). The bank also in this business has launched various services and offerings, like gold leasing service, loans were also given against the guarantee of gold (ICBC). On the other hand, Royal Bank of Canada also has similar kind of functions and roles in comparison with NBE, and ICBC Bank. However their specialty is to work with clients that are spread over 100 different countries of the world (RBC Capital Markets a). RBC provides these clients assistance and expertise in different kinds of industries, helps them managing their assets, buying them, disposing them as well (RBC Capital Markets b). Furthermore different businesses have also been targeted by RBC, namely real estate business, agriculture business, mining business, energy business and many more (RBC Capital Markets a) This comparison shows that usually banks that are working as a free standing company, adopts same line of actions. Though in terms of investing in different businesses may vary, as each bank has its own vision, its own set of rules and its own market. Furthermore opportunities and exposure in the alien country is another reason which can result in investing in different businesses. Tenure, whether short lived: National Bank of Egypt was established way back in 1898, since then the bank is continuously providing services in different regards and serving the masses around the world (National Bank of Egypt b). Furthermore the bank is garnering more possessions and assets through amalgamations, mergers and acquisitions. This in many ways shows that the bank is not only able to survive more than hundred years but also have developed dramatically with the passage of time. NBE as a free independent company has seen various ups and downs but nothing was able to deteriorate its financial stability. However in terms of investing in different businesses in a foreign country, the bank has adopted different strategies and planning which majority of times pays off. As a result the bank manages to gain its market share and break records in this regard over and over again. According to the fiscal year report of NBE for the year 2011, the bank has shown 2.2 % increase in total financial position over last year (National Bank of Egypt g) and accounted for 306.4 billion EGP (National Bank of Egypt f). Moreover in terms of total deposits the bank has shown an increase of 6.7% (261.1 billion EGP) (National Bank of Egypt e.). This is a glimpse of what NBE has achieved in the recent past. Considering the profitability of the bank and the success that it has over the years, eminent possibilities are that this trend is likely to continue in the future as well and the bank will continue to operate and further expand in different parts of the world. Whether It Was Indicative Of Firms In This Type Of Business, Or Operating In That Specific Location: National Bank of Egypt can easily be classified amongst the category of free standing company. As this bank has answered all the necessary questions and fulfilled all the requirements of being considered as a free standing company. Similarly the bank is performing its functions and duties in several different countries around the globe. NBE has directly or indirectly made investments in different businesses around the world which again is one of the prime characteristics or requirements in terms of qualifying as a free standing company. The bank has made investments in real estates, agriculture sector and in many different businesses. Furthermore, NBE is keen on facilitating and targeting small and medium businesses or enterprises. With it, the bank has also worked in foreign soil as a central bank for various countries which are already mentioned above. Meanwhile considering all the above mentioned facts and figures one can easily classify National Bank of Egypt as a free independent company as this bank is still making ways for further investing in foreign countries in order to maximize the profits or market shares. Comparing the views of Mira Wilkin: According to Mira Wilkin, free standing company can be defined as a firm that is located in one country and is planning or carrying out its business activities in another country (Wilkin, and Schroter, 129). As today multinational companies or organizations can be considered as an example of free standing companies that began their business from home or parent country and later expanding their business to other parts or countries of the world. Usually these expansions are somewhat related in the same business categories or line of work (Wilkin, and Schroter, 19). However by comparing the views of Mira Wilkin and analyzing them in accordance with National bank of Egypt as a free standing company, one can easily endorse her findings and revelations. As it is quite clear from the above mentioned facts and figures regarding NBE and the role and function this bank plays over different countries, that this bank works as a free independent company. Findings in this report are in accordance with the view of Mira Wilkin as one can easily state that National bank of Egypt is an example of free standing company. Conclusion: In this report critical analysis has been conducted about the bank of Egypt as a free trading company, and in order to do this, NBE’s history was researched which further make ways towards developing an idea about the different line of actions and working that this bank carried out over the passage of time. Changing roles and duties over different countries of the bank have also been researched. Comparison of NBE was done with the other banks (which were also working as a free standing company) so that better understanding can be developed in terms of changing business investments and different line of actions. At present NBE is engaged in different businesses around the world. Glimpse of business analysis were done which proved that bank is going in the right direction and its future is not obscure. Moreover all the findings and revelations were in accordance with the definition of free standing company by Mira Wilkins. This testifies that National Bank of Egypt is an example of free standing company. Works Cited Abdelazim, Walid. National Bank of Egypt to finance tourist projects. Daily News Egypt. Jul. 2012 12 Nov. 2012 Al-Youm, Al-Masry. $200 million loan from China due to arrive in National Bank of Egypt. Aletho News. Sep. 2012. 12 Nov. 2012 < http://alethonews.wordpress.com/tag/national-bank-of-egypt/> Egypt News. National Bank of Egypts ratings and negative outlook affirmed. Sep. 2012. 12 Nov. 2012 El Areeny, Abeer. Visa and the National Bank of Egypt Offer E-commerce solutions as part of summer campaign. Zawya News. Jun. 2012. 12 Nov. 2012 < http://www.zawya.com/story/Visa_and_the_National_Bank_of_Egypt_Offer_Ecommerce_solutions_as_part_of_summer_campaign-ZAWYA20120627103936/> El Taweel, Alaa. National Bank of Egypt to arrange USD420m facility for Mobinil. Zawya News. Jun. 2012. 12 Nov. 2012 National Bank of Egypt g. Financial Statements for the year ended 30/6/2011. 2011. 8 Nov. 2012 RBC Capital Markets b. RBC Capital Markets Office Locator. 2010. 8 Nov. 2012 https://www.rbccm.com/about/cid-155466.html Reuters. Egypt to sell $2bn worth of Islamic bonds. Arabian Business. Feb. 2012 11 Nov. 2012 Werr, Patrick. Egypt government launches CD sale to citizens abroad. Daily News Egypt. Apr. 2012 12 Nov. 2012 Wilkin, Mira and Harm Schroter. The Free Standing Company in the World Economy. Oxford. Oxford University Press, 1998. National Bank of Egypt New York Branch. Welcome. 2008. 8 Nov. 2012 ICBC. ICBC Business Review. 2010. 8 Nov. 2012 http://www.icbc.com.cn/ICBC/About%20Us/Brief%20Introduction/brief%20introduction%20to%20icbc.htm National Bank of Egypt a. About Us. 2007. 8 Nov. 2012 National Bank of Egypt b. Deposits and Saving Pools. 2007. 8 Nov. 2012 National Bank of Egypt c. Logo Story. 2007. 8 Nov. 2012 National Bank of Egypt d. “About”. Facebook. 2012. 8 Nov. 2012 National Bank of Egypt e. Annual Report. 2010. 8 Nov. 2012 National Bank of Egypt f. Balance Sheet. 2011. 8 Nov. 2012 National Bank of Egypt UK Branch. Welcome. 2012. 8 Nov. 2012 < http://www.nbeuk.com/> RBC Capital Markets a. Our Firm. 2010. 8 Nov. 2012 < https://www.rbccm.com/about/cid-202770.html> Serour, Islam. NBE targets EGP 1.1 billion reduction in bad debts portfolio. Daily News Egypt. Oct. 2012. 12 Nov. 2012 < http://dailynewsegypt.com/2012/10/28/nbe-targets-egp-1-1-billion-reduction-in-bad-debts-portfolio/> Read More