CAIRO UNIVERSITY

FACULTY OF ECONOMICS AND POLITICAL SCIENCE

PRESENTED TO:
DR/Mohammed Alaa
TA/Ghadeer Yehia

Abdalrahman Mohamed Yahia Mohamed (5220264)

Abdelrahim Emad Mousa (5221195)
Abdelrahman Yasser Mohammed (5220027)
Abdulla Atef Abdullah (5220598)
Ali Wael Ali (5220461)
Abdelrahman Gamal Abu Elfotoh (5220498)

5/30/2023

How did the National Bank of Egypt manage with the

consecutive crises since 2020?.
 CAIRO UNIVERSITY
FACULTY OF ECONOMICS AND POLITICAL SCIENCE

Executive Summary
Our research has five questions, but they are all about one primary function: planning. We
chose this function because it is where every decision starts, and once you know the
planning pattern, you can understand why the manager acted like that, and you can expect
what the next decision will be. In our case, we mainly discussed NBE's (National Bank of
Egypt) management under difficult, unexpected circumstances, such as COVID-19 and the
war between Russia and Ukraine. We will find lessons from both events and how the bank
managed them; it may have succeeded in managing one but failed with the other.
Furthermore, if we want to study NBE from a managerial view, then we must make a
demonstration about the bank's structure; it consists of several levels, and each one has its
tasks, and the organization has a hierarchical shape; we will discuss each one of them and
identify the shortcomings of such shape. Our resources are not mainly dependent on
interviews with the managers of NBE but also consist of different references from articles,
the bank's website, and books.
 CAIRO UNIVERSITY
FACULTY OF ECONOMICS AND POLITICAL SCIENCE

Introduction
After the corona pandemic, the world was significantly affected in all aspects of life,
especially the economic side. Furthermore, the world did not have time to recover due to
the Russian and Ukrainian war following shortly, which caused even more problems
because some trade routes got closed, some countries like Egypt were heavily dependent on
sources of food imported from Ukraine, or Russia got their share cut. Also, due to the
enormous loss that the world received from the war; the prices of the products went very
high; which made Egypt's imports very costly, which in turn, affected the prices in Egypt
itself which caused its debts to rise and it is productivity to decrease so with all of this
damaging the economy, we need to figure how the banks dealt with these crises, and how
they plan to overcome it and what strategies did they use. So we visited one of Egypt's
biggest banks, the NBE (National Bank of Egypt). The bank was established in 1898, and it
is considered one of the oldest banks still operating in Egypt. It has a total financial
position of an astonishing 3.3 trillion Egyptian pounds and achieved other achievements
from July 1st, 2020, to December 31st, 2021 ( 18 months ) NBE managed to achieve
incredible new performance. At the end of Dec. 2021, it recorded EGP 3.3 trillion, growing
by 60.2%, and its total assets arrived at 37.5% and continued to increase to EGP 3.6 trillion
at the end of 2022. (NBE). (NBE Site). So with all these bank achievements, we went to
interview the manager of the NBE branch at Cairo University, Dr. Mustafa Mohamed
Mustafa, in his office. He has been working as the manager there since June 2020, and
since he has been employed there during COVID-19, we figured he would be the right
person to interview.
 CAIRO UNIVERSITY
FACULTY OF ECONOMICS AND POLITICAL SCIENCE

The organizational structure of NBE:

The National Bank of Egypt (NBE) is the oldest and largest commercial Bank in Egypt, as
we stated earlier, which has a history dating back to 1898. The structure of a commercial
Bank may be similar but not identical to a regular organization, depending on the size of
the bank. The organizational structure of the NBE is divided into several levels, each with
its own set of responsibilities. At the top level are the CEO and the board of directors, who
are responsible for setting the bank's strategies and ensuring that it is implemented
effectively. Then, we have the executive management team, which also includes the CEO
and senior executives; they are responsible for managing the bank's day-to-day operations,
for example, making decisions on lending and investment activities. The next level down in
the organizational structure is the various departments and divisions within the bank, such
as retail banking, corporate banking, and treasury. Each department has its responsibilities
and is headed by a department manager who reports to the executive management team.
The primary purpose of this structure is to ensure efficient and effective management of the
bank's operations; It also gives each department its specific area of expertise. When it
comes to the shortcomings; one of the main shortcomings of this structure is that it can be
slow to adapt to changes in the market. Because decision-making is centralized at the top, it
takes time for new ideas and strategies to be implemented throughout the bank. In addition,
the hierarchical, bureaucratic structure can sometimes lead to communication breakdowns
between departments, hindering innovation. With the rise of digital banking and smart
fintech (Financial Technology) companies, the NBE may need to restructure its operations
to remain competitive and relevant in the rapidly changing banking industry. By addressing
these shortcomings, the NBE can continue to play a vital role in Egypt's economy and
support its customers' financial needs.(Hunter, W. C., & Timme, S. G. , 1986).

The management issue under study:

Ukrainian-Russian War and Covid-19:

The Russian and Ukraine war and the ongoing COVID-19 pandemic have created a perfect
storm of challenges impacting the global economy and the banking system; the war and
COVID-19 are pushing inflation to a high rate, dampening consumer demand and
economic growth, banks and other industries face higher costs, low revenues, the impact is
remarkably severe like what happen in 2008 crisis, however achieving a swift end to the
war and COVID-19 remains a question mark.

The Russian-Ukrainian war and the Coronavirus affected the banking sector all over the
world, and their impact continues to this day, and we will demonstrate some of the effects:
1- One of the impacts of the war on the banking sector is that Russian banks have been
isolated from the world, such as the response of all Russian banks from the SWIFT global
Banking system.
 CAIRO UNIVERSITY
FACULTY OF ECONOMICS AND POLITICAL SCIENCE

2- Price Inflation: The war led to price inflation, which led most banks to resort to high-
interest investment certificates, raising interest rates.
3-Stock Market: The continued crisis of the Russian-Ukrainian war, the shares of many
companies declined on the stock exchange

The Coronavirus pandemic has had a significant impact on the banking sector in the
following ways:

1- Lower interest rates: Central banks worldwide have cut interest rates to near zero to
support the economy during the pandemic; this has reduced banks' net interest margins and
profitability.
2- Higher loan losses: Banks are witnessing higher provisions for loan losses as more
borrowers default or defer payments due to the economic slowdown, which puts pressure
on bank capital and balance sheets.

How do banks deal with crises?

Sanctions compliance: Banks deal with the war as a long-time problem because nobody
knows when the war will end, so banks are working to comply with the extensive sanctions
imposed on Russia by the US, EU, and other countries. This includes freezing Russian
assets, blocking transactions, and screening customers. Banks that fail to comply with
sanctions could face heavy fines and penalties, Raising interest rates, tempting investment
sights. Also, Coronavirus forced banks around the world to follow health protocols such as
allowing the entry of a certain number of customers within the bank and examining all
bank employees to ensure their safety. Some banks may close sometimes for cleaning to
ensure that people will not get infected.

How banks used the technology to deal with the crisis?

Technology is considered one of the essential tools to use in times of crisis, so the bank had
to know how to deal with technology because it was forced to do so during the Corona
period. Everything related to withdrawals, deposits, and money transfers was done through
applications on the mobile phone or websites designated for the bank. Banks also provided
training courses for their employees on dealing with banking operations through electronic
devices and how to help customers. There are also some experiments conducted in a few
banks in Singapore to try to use robots to do some simple tasks, such as answering
customer inquiries or Verifying customer data. There are experiments under development
to enable robots to provide financial services in the future, which makes us never deny the
importance of technology in our lives and how we can use and exploit a crisis.
 CAIRO UNIVERSITY
FACULTY OF ECONOMICS AND POLITICAL SCIENCE

The main results:

We took a peek at what happened to the bank industry in the world, but now we need to
recognize what happened to NBE. The corona pandemic was a disaster for banks. There
was no demand for investment during that time, and not every bank could cope with the
pandemic. However, NBE was ready for the unexpected, thanks to alliances with firms and
ministries such as the cooperation’s protocols that NBE signed with MCIT (Ministry of
Communication and Information Technology); this protocol allowed NBE to cope with
hazards and from way before the pandemic; the bank as the manager says; was getting
ready for working online and working from home, for example, he said "When we first
made zoom meetings in 2014; all employees were not convinced, they were skeptical about
it, and they did not see what the importance of it is. This decision helped us in NBE to be
ready for working from home", an excellent example of wise planning; managers in NBE
had this vision that the online technology would take over, even if they did not expect such
events, but it did work out. And thanks to technological advances and the improvement that
NBE was constantly working on, customers had most of their banking transactions without
any human contact whatsoever; this is because NBE following the government's strategy of
financial inclusion, which has a goal of facilitating financial services and to build
infrastructure for the financial technology, and to boost and help banks, this is a long-term
plan. However, there is some other part of transactions that must be done in the bank's
branch, and this required a non-programmed decision, so the managers decided that the
bank will be evacuated and sterilized at least twice a day, also, when customers visit the
bank they will not enter it, but instead; they will communicate with their customers in the
open air so they would not get infected.

During the war between Russia and Ukraine, the bank issued investment certificates so that
foreign investors get interested again in investing in Egypt because Russia and Ukraine
the war was a significant influence in raising inflation rates, and it did make Egypt lose a
significant part of its hot money (foreign investors' money), and even the Federal Bank of
America raised its interest rate due to the war, so when the interest rate was raised in
America; investors invested in America's banks instead of Egypt, so that is why the bank
issued these certificates with high-interest rates. But unfortunately, not everyone was
interested in investing in the investment certificate, but why were people not encouraged to
invest in investment certificates? The manager answered, "Nobody expected that the war
would last so long, and nobody did expect that the war would have that major influence on
the economy ."That explains why the inflation rate was exceptionally high in Egypt; there
were no expectations that the war would last that long, so there was no plan for it, or at
least it was too late. However, it could have been worse than that; the bank learned lessons
from the pandemic and implemented strategies for financial inclusion in the pandemic that
made investing easier for everybody during the Russia-Ukraine war, which helped the
economy go through the war with minor losses, but still, the economy has not yet recovered
from the consequent crises, but now the bank realized that the crises could stay with us for
a long time so it will take more measures in the future
 CAIRO UNIVERSITY
FACULTY OF ECONOMICS AND POLITICAL SCIENCE

Conclusion
The National Bank of Egypt has demonstrated remarkable resilience and sound decision-
making in navigating various crises. Despite the difficult conditions posed by the COVID-
19 pandemic and other external factors, such as the Russia-Ukraine conflict and the US
Federal Reserve raising interest rates, the National Bank of Egypt has maintained stable
operations and its stakeholders' confidence.
The bank was quick to respond to the pandemic by implementing measures such as
adopting social distancing measures in branches and enabling remote work arrangements to
protect its staff and customers. Additionally, the bank has extended financial support and
relief to customers affected by the pandemic to mitigate the economic impact. Furthermore,
the National Bank of Egypt has demonstrated effective risk management strategies by
diversifying its portfolio, branching out into new markets, and investing in digital
infrastructure to future-proof its operations. In the face of geopolitical risks and fluctuations
in global markets, such as the Russia-Ukraine conflict and the US Federal Reserve raising
interest rates, the bank was able to withstand financial turbulence and maintain its position
as a leading financial institution in the region, though it might have not dealt effectively
with the war.

Overall, the National Bank of Egypt's success in dealing with various crises undoubtedly
reflects its commitment to responsible banking practices and its ability to adapt and
innovate in the face of challenges. The bank's leadership and strategic direction have served
as a model for other institutions, contributing to the broader stability of the financial sector
in the region.
Since its inception in 1898, the National Bank has been one of the most promising banks in
Egypt, and it is still so, according to the testimony of millions of scholars. Management is
one of the best existing methods, and the bank has been able to maintain its distinguished
position throughout its productive career by keeping pace with all banking innovations,
developing its services system, and using the latest electronic systems in order to achieve
the highest levels of satisfaction for its customers.
 CAIRO UNIVERSITY
FACULTY OF ECONOMICS AND POLITICAL SCIENCE

References
1- Https://www.nbe.com.eg/NBE/E/#/EN/AboutUS accessed on 28
May.2023.

2- https://www.ndb.int/governance/organisational-structure/ , December 15 ,
2020 , accessed on 26 May.2023.

3- Hunter, W. C., & Timme, S. G. (1986). Technical Change, Organizational

Form, and the Structure of Bank Production. Journal of Money, Credit and
Banking, 18(2), 152–166.

Link : https://doi.org/10.2307/1992199

Accessed on 26 May. 2023.