This Note provides a practical overview of Egypt’s banking sector, outlining the legal framework governing commercial banks, foreign bank branches, Islamic banks, and digital banks, as well as Payment Systems, Payment Services, digital financial services, and foreign exchange. These activities are primarily regulated and supervised under the CBE Law and the directives and circulars issued by the CBE.
The CBE Law superseded the Central Bank, the Banking Sector and Money Law No. 88 of 2003, introducing a modern regulatory framework aimed at strengthening financial stability, promoting financial inclusion, and supporting the digital transformation of the Egyptian banking sector.
The CBE was established under the Central Bank of Egypt and the National Bank of Egypt Law No. 250 of 1960 and is now governed by the CBE law. The CBE is responsible for licensing, regulating, and supervising banks and other entities in conducting their Banking Activities, payment activities, and financial infrastructure activities in Egypt. It also has exclusive authority to issue binding directives and circulars governing Banking Activities, other activities related to bank operations, and payment-related activities, including Payment Systems, Payment Services, electronic money, mobile payments, tokenization, cybersecurity, and anti-money laundering.
Notably, all Non-Banking Financial Activities in Egypt are subject to the supervision of the FRA and are, thus, excluded from the scope of this Note.
Whenever used in this Note, the following terms have the following meanings:
| “AML” | means anti-money laundering. |
| “Banking Activities” | means any activities that primarily and regularly involve accepting deposits, obtaining funds, and investing such funds in providing financing and credit facilities or contributing to the capital of companies, as well as any activity that banking custom recognises as banking business. |
| “CBE” | means the Central Bank of Egypt. |
| “CBE Law” | means the Central Bank and Banking System Law No. 194 of 2020. |
| “CBE’s BOD” | means the Board of Directors of the CBE. |
| “CDCVM” | means the consumer device cardholder verification method, which includes one of the following methods: (a) a mobile phone passcode; (b) a card personal identification number; or (c) biometric user authentication, such as iris recognition, face recognition, fingerprint, and voice recognition. |
| “CFT” | means combating the financing of terrorism. |
| “EBC” | means the Egyptian Banks Company. |
| “EGP” | means Egyptian pounds. |
| “EMLCU” | means the Egyptian Money Laundering and Terrorist Financing Combating Unit established at the CBE pursuant to the Anti-Money Laundering Law No. 80 of 2002. |
| “FinTech Law” | means Law No. 5 of 2022 on Regulating and Developing the Use of Financial Technology in Non-Banking Financial Activities. |
| “FRA” | means the Financial Regulatory Authority of the Arab Republic of Egypt. |
| “Governor” | means the CBE’s appointed Governor. |
| “Non-Banking Financial Activities” | means, as defined in Article 1(4) of the FinTech Law, the non-banking financial markets and instruments that are subject to the supervision and oversight of the FRA, including capital markets, insurance activities, mortgage finance, financial leasing, factoring, medium, small, and micro enterprises (MSME) financing, and consumer finance. |
| “Payment Facilitators” | means a company with financial solvency that provides financial and technical services through alternative delivery channels of its sub-merchants, with which contracts have been concluded on behalf of the bank, for the provision of e-payment services. |
| “Payment Services” | means services relating to account information, or to the issuance, sending, receipt, or execution of payment orders and transactions, whether in local or foreign currency, including the issuance and management of payment instruments and electronic money. |
| “Payment Systems” | means the set of tools and procedures for payment, clearing, or settlement of funds to discharge obligations by transferring funds between two (2) or more parties through an electronic system. |
| “Permitted Activities” | means the banking and commercial activities permitted by the CBE’s directives and circulars to be conducted by representative offices. |
| “PSO” | means an entity licensed to operate Payment Systems in Egypt, or from abroad for residents in Egypt. |
| “PSP” | means an entity licensed to provide one (1) or more Payment Services in Egypt. |
| “Sharia Supervisory Committee” | means the committee established within each Islamic bank, which issues Sharia opinions, known as fatwas, on banking products to ensure periodic adherence to Sharia principles in the conduct of its operations. |
| “Technical Payment Aggregators” | means a company with financial solvency that provides technical services to its sub-merchants on behalf of the bank through the alternative delivery channels of the Technical Payment Aggregator, which includes providing e-payment services for paying bills or services. |
| “USD” | means United States dollars. |
The regulatory framework accommodates different banking models, including conventional banking, which covers commercial banks, foreign bank branches, and specialised banks; Islamic banking; and a recent dedicated framework for digital banks. Accordingly, the distinction between banks may extend not only to ownership or organisational structure, but also to the manner in which banking services are delivered and, in the case of Islamic banks, the principles governing their banking operations.
3-1 Types of Banks in Egypt
The CBE Law defines banks as companies and foreign bank branches licensed by the CBE to carry out Banking Activities in accordance with the CBE Law. Accordingly, only entities licensed by and registered with the CBE may conduct Banking Activities and/or use the word “bank”, or any equivalent expression, in connection with their business.
Pursuant to the CBE Law, the CBE’s BOD may grant an establishment an initial approval to obtain a banking licence authorising it to carry out Banking Activities, provided that it: (a) is incorporated as an Egyptian joint-stock company or operates as a branch of a foreign bank; (b) satisfies the minimum capital requirements prescribed by the CBE Law; and (c) complies with the other licensing conditions and requirements set out in the CBE Law and the directives and circulars issued by the CBE.
It is worth noting that investment banks and financial institutions are regulated and supervised by the FRA, which regulates and supervises Non-Banking Financial Activities that utilise financial technology, such as consumer finance, financial leasing, and factoring activities, in accordance with the FinTech Law. Therefore, investment banks and financial institutions do not form part of the banking sector regulated by the CBE.
Licensed banks in Egypt are commonly established in one of the following forms:
3-1-1 Commercial Banks:
Commercial banks form the core of Egypt’s banking sector and economy, acting as facilitators between governmental institutions, individuals, and commercial entities by mobilising savings and providing financial services and banking products.
Licensed commercial banks are generally permitted to undertake a broad range of Banking Activities, subject to the applicable regulatory requirements and any restrictions imposed by the CBE. These Banking Activities include accepting deposits, granting credit facilities, providing trade finance, issuing letters of credit and guarantees, conducting foreign exchange transactions, providing payment and collection services, and undertaking other financial and banking activities.
The CBE’s prudent standard also imposes strict requirements on banks relating to capital adequacy, liquidity, credit risk, and asset quality.
A commercial bank’s issued and paid-up capital shall not be less than EGP 5,000,000,000 (five billion Egyptian pounds). Such capital requirement shall apply to specialized banks and Islamic banks as specified below.
3-1-2 Foreign Bank Branches:
Foreign bank branches, or Egyptian joint-stock companies subsidised by a foreign bank, which are licensed and registered with the CBE to carry out Banking Activities in Egypt shall have a head office possessing a recognised nationality and be subject to the supervision of the competent foreign regulatory authority in its home jurisdiction. Furthermore, such authority shall: (i) approve the bank’s operations in Egypt; (ii) apply the principle of consolidated supervision; and (iii) have no objection to conducting joint supervision with the CBE. Its allocated capital shall not be less than USD 150,000,000 (one hundred and fifty million United States dollars) or its equivalent in foreign currencies.
3-1-3 Representative Offices:
Foreign banks that do not have an existing branch in Egypt may be authorised by the Governor, upon the approval of the CBE’s BOD, to establish representative offices in Egypt. Representative offices carry out the Permitted Activities, including, without limitation, conducting market and investment opportunity studies and acting as a liaison between their foreign head offices and banks registered with the CBE.
Similar to foreign bank branches, representative offices require approval for their establishment and operation in Egypt from the equivalent foreign regulatory authority in their home jurisdiction. The CBE shall coordinate on the supervision of the representative offices with the said foreign authority.
3-1-4 Specialised Banks:
Specialised banks are banks licensed to conduct only certain Banking Activities related to certain industries or specialised strategic sectors. The capital requirements for specialised banks are the same as for commercial banks, namely EGP 5,000,000,000 (five billion Egyptian pounds).
The CBE Law provides flexibility for specialised banks, based on the nature of the strategic sector to which the specialised bank offers its services, by giving certain incentives, for example, exemption from the general capital requirements referred to under section 3-1-1.
An example of such banks operating in Egypt include Agricultural Bank of Egypt.
3-1-5 Islamic Banks:
Islamic banks conduct the same Banking Activities as other banks operating in Egypt. However, the main distinction between Islamic and conventional banks is that Islamic banks conduct their Banking Activities in accordance with the principles of Islamic Sharia, which prohibit the payment and receipt of interest, known as riba. The capital requirements for Islamic banks are the same as for commercial banks, namely EGP 5,000,000,000 (five billion Egyptian pounds).
Islamic banking services and transactions are subject to review and approval by each bank’s Sharia Supervisory Committee to ensure compliance with Islamic Sharia. Islamic banks may provide financing through structures such as Musharakah, Murabahah, Mudarabah, and Ijarah, which are based on asset-backed or profit-and-loss-sharing arrangements rather than interest-bearing lending.
3-1-6 Digital Banks:
Digital banks in Egypt offer specific Banking Activities as permitted in their CBE licence. According to the Digital Banks Circular, an applicant establishes an Egyptian joint-stock company with a minimum issued and paid-up capital of EGP 2,000,000,000 (two billion Egyptian pounds), or a branch of a foreign digital bank with a minimum issued and paid-up capital of USD 60,000,000 (sixty million United States dollars). Applicants must submit a detailed feasibility study identifying target segments and planned products, together with information technology plans and cybersecurity strategies.
The CBE requires the shareholding of a digital bank to include a financial institution with recognised experience similar to the specific digital Banking Activities, according to the following structure: (i) holding the largest ownership interest among other shareholders and their related parties; and (ii) holding an ownership percentage of not less than 30% (thirty per cent) of the digital bank’s total capital.
Digital banks shall carry out all Banking Activities specified in their licence, which will not include financing of large corporations unless the requirements associated with such financing activities set for banks in Egypt by the CBE, whether digital or conventional, are met, including, without limitation, capital requirements, credit risk, liquidity, and AML/CFT obligations.
As at the date of this Note, only banks licensed by the CBE to operate as a digital bank in Egypt are one bank and yomo digital bank.
3-2 Acquiring Shares and Control of Banks
There is no nationality-based ownership cap. Egyptians and foreign persons or entities may own bank capital without a maximum ceiling imposed by any Egyptian legislation other than the CBE Law, provided that such persons or entities comply with the following: (i) an ownership percentage exceeding 5% (five percent) and less than 10% (ten percent) of the issued capital or voting rights requires pre-notification to the CBE within no more than fifteen (15) days from the completion of the ownership transfer; or (ii) an ownership percentage exceeding 10% (ten percent) of the issued capital or voting rights, or any other percentage that may lead to actual control of the relevant bank, requires (a) obtaining the prior approval of the CBE’s BOD within sixty (60) days before the completion of the ownership transfer, and (b) for foreign bank branches, the approval of the competent foreign regulatory authority in its home jurisdiction. Any subsequent increase or decrease of 1% (one percent) in the ownership percentages mentioned under (i) and (ii) above requires either notification to, or the prior approval of, the CBE, as the case may be.
3-3 FinTech & E-payments Regulations in Egypt
3-3-1 FinTech Regulations:
The Egyptian FinTech sector has experienced significant growth, evolving from a traditionally cash-reliant economy into a more dynamic digital economy, driven by the CBE’s strategic vision to promote digital integration from financial institutions to the customer interface.
The CBE Law allowed the creation of a regulated sandbox for the development of FinTech companies’ products and technological regulatory legislation. This will enable FinTech companies, developers, and legislators to test innovative products, services, or business models and associated proposed regulations under the CBE’s supervision before they are launched commercially. This allows the CBE to assess the potential risks in practice, while safeguarding economic and financial stability and consumer protection during the sandbox phase of the FinTech products.
3-3-2 E-payments Regulations:
The CBE has issued a comprehensive set of circulars governing Payment Systems and Payment Services, including the licensing and supervision of PSOs and PSPs. The circulars cover mobile payment services, interoperability of cash deposit and withdrawal services, instant payment network services (IPN), Payment Facilitators and Technical Payment Aggregators, and the standards for contactless electronic payments and card tokenisation services on electronic devices.
Mobile payment services shall be carried out by a registered bank after obtaining approval from the CBE (the “Operating Bank”). The Operating Bank offering e-services, such as mobile wallets, must manage the compliance of such services with the CBE’s directives and circulars, which includes, without limitation: (i) establishing a maximum limit for the mobile wallet on the value and number of daily and monthly transactions that may be conducted through the mobile wallet; and (ii) ensuring compliance with AML/CFT regulations and maintaining robust information security measures, including multi-factor authentication and conducting regular penetration testing. Only Egyptian citizens are permitted to open mobile wallet accounts.
In accordance with the Tokenization Circular, the tokenisation feature replaces a card’s primary account number (PAN) with a unique digital token, thereby enhancing the security of mobile and contactless payments. The Tokenization Circular requires the issuance of an additional token, known as the “Auxiliary Token”, through Meeza, the national payment scheme, for payment cards issued in Egypt that bear the acceptance mark of an international payment scheme. The EBC acts as the technical service provider and operator of the Unified Issuer Token Service Provider (TSP) Interface, which connects issuer banks with international payment schemes. Notwithstanding the EBC’s technical role, issuer banks remain responsible for carrying out customer identification and verification procedures and authenticating cardholders using the appropriate cardholder verification method (CVM), including CDCVM.
Apple Pay is currently the only token requestor in Egypt authorised to provide third-party wallet services and to authenticate cardholders using CDCVM.
The Aggregators and Facilitators Circular governs the activities of digital payment intermediaries and facilitates the expansion of electronic payment acceptance among merchants and businesses. The Aggregators and Facilitators Circular distinguishes between Technical Payment Aggregators, which provide technical platforms and support, and Payment Facilitators, which handle both technical services and financial settlements on behalf of registered banks. Under the Aggregators and Facilitators Circular, banks maintain ultimate accountability for strategic risk management, data confidentiality, and strict compliance with AML/CFT laws. Key operational mandates include restricting all transactions to EGP unless an approval is obtained from the CBE, requiring bank guarantees to secure sub-merchant proceeds, and enforcing high-level security standards, such as encryption and mandatory annual penetration testing. The Aggregators and Facilitators Circular prohibits sub-merchants from engaging in specific high-risk activities, including virtual currencies, gambling, and crowdfunding, to ensure the stability and integrity of the national payment ecosystem.
The CBE Law provides that PSPs and PSOs may not operate in Egypt without a CBE licence. The PSPs and PSOs Circular states that an applicant must be an Egyptian joint-stock company dedicated exclusively to providing Payment Services or operating Payment Systems, as the case may be, complying with the following requirements, including, without limitation: (i) fully disclosing its ownership structure and ultimate beneficial owners; (ii) minimum capital tiered by category at (a) EGP 30,000,000 (thirty million Egyptian pounds) for Category A PSPs, (b) EGP 10,000,000 (ten million Egyptian pounds) for Category B PSPs, (c) EGP 20,000,000 (twenty million Egyptian pounds) for account information and payment initiation service providers, and (d) EGP 500,000,000 (five hundred million Egyptian pounds) for PSOs; and (iii) in the case of a PSP, identifying the role of the bank in the operation model. Licensed PSPs and PSOs are additionally subject to AML/CFT obligations.
The PSPs and PSOs Circular extends to institutions operating from outside Egypt that provide Payment Services to, or operate Payment Systems for, residents of Egypt. Such entities must demonstrate a track record of three (3) years of operating Payment Systems or offering Payment Services outside Egypt, and a foreign PSO must be licensed by an equivalent regulatory authority.
InstaPay is currently one of the first and most known licensed PSP in Egypt.
Lastly, it is the role of the CBE’s BOD to issue or approve the regulations governing electronic banking and Payment Services, including the electronic authentication of banking transactions and of payment and transfer instructions. Such electronic means, carried out in accordance with the CBE’s BOD rules, shall have the same evidentiary weight as original written documents.
3-4 Foreign Exchange in Egypt
As a general rule, the CBE Law requires transactions conducted in Egypt to be denominated in EGP, subject to certain exceptions. However, the CBE Law permits any natural or legal person to retain, own, or possess foreign currency and to conduct foreign exchange transactions, including transfers into and out of Egypt, through registered banks. Banks may conduct all foreign exchange transactions, including accepting foreign currency deposits, dealing in foreign currencies, and effecting transfers into and out of Egypt, while the import and export of foreign currencies require prior CBE approval.
It is worth mentioning that, in accordance with the CBE Law, it is prohibited to issue, trade, or promote cryptocurrencies or electronic money in Egypt, or to operate platforms for their trading, without obtaining a CBE licence.
In general, banking sectors, whether in common-law or civil-law jurisdictions, differ materially based on the structure of each country and its economy. The following are the key distinctions between the Egyptian banking sector, operating within a civil-law jurisdiction, and the banking sectors of the United Kingdom (“UK”) and the United States of America (“US”), which operate within common-law jurisdictions.
Under Egypt’s codified civil-law jurisdiction, the CBE carries out the regulation and supervision of the banking sector, which includes broad statutory powers over licensing, prudent supervision, monetary policy, consumer protection, and competition in the banking and financial markets under the CBE Law.
In the UK banking sector, there is a “twin peaks” model, which splits supervisory and regulatory authority between the Prudential Regulation Authority (the “PRA”), operating within the Bank of England, and the Financial Conduct Authority (the “FCA”). The PRA focuses on the safety and soundness of banks, building societies, credit unions, insurers, and major investment firms, and checks capital levels and risk management. The FCA regulates financial firms’ conduct and sets out rules for consumer protection.
The US is the most fragmented of the three models, reflecting the US dual banking system. Federal and state regulators share responsibility for bank supervision, with the applicable regulations depending largely on the bank’s charter and Federal Reserve membership. Nationally chartered banks are primarily supervised by the Office of the Comptroller of the Currency (OCC), while state-chartered banks are supervised by their state regulator and, depending on their Federal Reserve membership, by either the Federal Reserve or the Federal Deposit Insurance Corporation (FDIC).
In common-law jurisdictions, the trust concept facilitates flexible, non-possessory security structures that are particularly well suited to syndicated lending, allowing a security trustee to hold security for lenders as the lending group changes without requiring the security to be re-granted or re-registered for each new lender. By contrast, civil-law systems have traditionally relied on statutory, asset-specific security interests and registration or perfection requirements.
Authored by Hossam Gramon, Partner and Head of Projects & Banking Finance, Alaa Ragab, Senior Associate, Hadil Helmy, Senior Associate, Malak Zaki, Associate, Mostafa Serry, Associate, and Karim Madian, Junior Associate.
