Talks between Saudi Arabia and Egypt about the Saudi Public Investment Fund (PIF) acquiring the Egyptian government-owned United Bank have stalled.
According to Bloomberg and Reuters, the suspension of the talks, which began last year, was due to a disagreement over how to calculate the impact of the Egyptian pound’s depreciation on the deal.
The sources revealed that PIF, the Kingdom’s sovereign wealth fund, wants to evaluate the United Bank in Egyptian pounds as long as the value of the deal is determined in dollars upon transfer of ownership, whereas Egypt’s Central Bank prefers evaluation in dollars only.
The United Bank is worth $600 million. It was founded in 2006 and currently has 65 branches in Egypt.
Egypt has devalued the pound three times in about a year, making it the world’s third worst-performing currency over the past year.
The acquisition announcement in December 2022 coincided with Saudi’s pledge to invest $10 billion in sectors such as healthcare, education, and agriculture. The Kingdom has already paid $1.3 billion for state-owned stakes in four publicly traded Egyptian companies and deposited $5 billion in the country’s Central Bank.
At the time, Saudi Finance Minister Mohammed Al-Jadaan said that the Kingdom had begun to “invest heavily in Egypt” and would “continue to look at investment opportunities,” which are more important than deposits.
Egypt, one of the world’s largest wheat importers, is racing to secure financial assistance from its Gulf Arab allies to shore up an economy battered by rising food and fuel import bills. Egypt reached a staff-level agreement with the International Monetary Fund (IMF) for a $3 billion loan, which was approved in December 2022.