French banks have highest exposure to turmoil, sparking worries over losses

France’s banks are more exposed to Egypt than European and US peers and may see losses on bad loans rise as the country is plunged into political crisis, analysts said yesterday.

Protests against Egyptian President Hosni Mubarak’s 30-year rule have led to the closure of the country’s banks and rattled European financial markets.

“It is very possible that we will see a rise in loan-loss provisions...especially seeing as Egypt up until now had pretty weak loan provision levels,” said a Paris-based bank analyst.

French banks such as Societe Generale and Credit Agricole provide over one third of all international loans to Egypt, according to the most reliable data on cross-border lending.

SocGen’s Egyptian subsidiary has 140 branches accounting for €148.6m (£127m) in pre-tax profit.

Overall, lending from French banks totals $17.6bn, versus $10.7bn from the UK, $6.3bn from Italy and $5.4bn from American banks.

Also, UK bank Barclays added its network of branches in Egypt closed yesterday, following advice from the Egyptian central bank in the wake of ongoing political unrest in the country.

Egypt has proven a fast-growing, attractive banking market because of its low loan penetration rate and is Africa’s second-largest economy, according to Citigroup analysts.