Citigroup, Inc. (C - Free Report) closed all its branches in Egypt, following the instructions from Central Bank of Egypt (CBE). Citigroup’s branches will remain closed until it gets any further intimation from CBE to act otherwise. All the financial institutions, including the country’s stock exchange, have been ordered to remain closed for this week due to the recent political upheaval.
Egypt, known for its pyramids, pharaohs and the Sphinx has lately witnessed a fresh spurt of violence and insurgence, which has disrupted the nation’s harmony. The extreme violence between the Muslim Brotherhood and the army has been the cause of unrest, significantly affecting the otherwise flourishing Egyptian economy.
Citigroup started operating in Egypt in 1975 and has been offering consumer and institutional banking services since then. Currently, it has 9 branches across the nation with 650 employees. Moreover, it has a net investment of $250 million in the country.
With recent translational losses of $100 million, Citigroup’s overall portfolio in Egypt is highly vulnerable to the negative impact of political strife and disharmony.
Obeying the same instructions, HSBC Holdings plc has also shut its branches but is planning to reopen on Sunday. It has more than 75 branches with 2,300 employees in the country.
Egypt was acknowledged as a “priority growth market” by Stuart Gulliver, HSBC’s Chief Executive Officer, with lending exposure of more than $10 billion. However, HSBC’s profit in the first half of 2013 was $117 million versus $137 million in the first half of 2012.
The present unstable economy of the country is a threat to financial institutions, challenging the security of customers as well as employees. International peacemakers are trying to negotiate with the concerned parties in order to restore the nation’s harmony.
Currently, Citigroup carries a Zacks Rank #3 (Hold). Some better performing banks include BankUnited, Inc. (BKU - Free Report) with a Zacks Rank #1 (Strong Buy), and The PNC Financial Services Group, Inc. (PNC - Free Report) with a Zacks Rank #2 (Buy).