Talks between Saudi Arabia and Egypt over the purchase of Cairo-based United Bank have stalled over a disagreement about how to value the multi-million-dollar transaction, in a stumbling block as the government works to raise sorely-needed funding.
Discussions over the state-owned lender have faltered over how to account for the plunging value of the Egyptian pound, people familiar with the situation said. They asked not to be identified as the matter is private.
Saudi Arabia’s sovereign Public Investment Fund started negotiations with Egyptian authorities about buying the bank last year, part of the kingdom’s $10 billion pledge to help shore up the finances of the Middle East’s most populous nation. The deal could be worth as much as $600 million, Bloomberg reported at the time.
The PIF wanted to value United Bank in Egypt’s pound with the dollar amount determined at the time of the transaction, while the central bank preferred a dollar-based valuation from the start, the people said. Egypt has devalued the pound three times in about a year, making it the world’s third-worst performing currency over the past 12 months.
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