KEY THEMES
Yesterday, media reports of leaked U.S. Treasury’s FinCen confidential documents circulated in the market, naming a list of many global banks that were said to continue doing business with entities that were involved in money laundering activities. These media reports were based on leaked suspicious activity reports (SARs) filed by banks and other financial firms with the U.S. Department’s Financial Crimes Enforcement Network (FinCen). We note that FinCen had said in a statement on its website that it was aware of the intension of various media outlets to publish such documents. In addition, considering that the leaked documents date back to around two decades, having a bank name on that list does not necessarily indicate any wrongdoing, but there could be an issue if such banks continued to do business with the illicit flagged entities even after disclosure to the U.S. Treasury.
The question now is whether this has any ramifications on Egypt’s banking sector. One media report linked to Forbes Middle East listed two Egyptian banks, namely QNB Al Ahli [QNBA] and Housing & Development Bank [HDBK] with amounts less than USD500,000 and USD15,000, respectively. So, we do not think that such leaked documents will have an impact on Egyptian banks, noting the strength of the Egyptian banking sector. That said, we believe that any sell-off as a result of these news should be considered an opportunity to accumulate on good names. Please check our previous PRIMETime issues for some of the names we like.
POSITIVE
BINV, HRHO, MTIE, RAYA: We reiterate our calls on these four names as each company moves to monetize its assets in the e-payment/fintech space somehow.