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Bankruptcy law will attract investments to Egypt - Moody’s

Bankruptcy law will attract investments to Egypt - Moody’s
The Egyptian Parliament recently approved the country’s first bankruptcy law

Cairo - Mubasher: The Egyptian House of Representatives approved the country’s first-ever bankruptcy law last week, and Moody's Investors Service believes the move will encourage local and foreign investment.

The new law is credit positive for banks because it will provide them with more options to deal with viable troubled companies, making loan workouts more flexible and faster, Moody’s said in a recent report.

The new bankruptcy law will speed up the liquidation of non-viable companies, which will increase recovery amounts, and it will also allow borrowers and creditors to reach restructuring solutions more swiftly, increasing recovery amounts and improving banks’ ability to deal with problem loans, the report indicated.

The National Bank of Egypt and Banque Misr, the biggest two banks in the country have taken more than 10 years to recover from legacy problem loans and reduce their aggregate ratio of nonperforming loans to gross loans to around 2% as of June 2017 from more than 25% a decade ago, the report highlighted.