Customers queue at Egypt banks

With the political crisis still unresolved, banks may see a run on them [EPA]

A steady stream of employees flowed into Cairo’s financial district and customers queued to access their accounts on Sunday, the first day for the country’s banks to open after a week-long closure due to political protests.

Bankers are bracing for chaos in dealing rooms with foreign investors and local businessmen fleeing the Egyptian pound after the street protests paralysed much of the economy and dried up important sources of foreign exchange.

While a limited number of banks opened, the stock markets remained closed.

The Egyptian stock exchange will remain closed for an eighth day on Tuesday, a stock exchange official said. The exchange on Saturday reversed a decision taken last week to reopen on Monday, saying that it would announce the new reopening date 48 hours beforehand.

Armoured personnel carriers stood guard at intersections where soldiers had erected sandbag barriers, as buses dropped employees off at large state banks.

Outside the banks, dozens of customers were waiting to enter when they open for public business at 10:00am local time (0800 GMT).

“We have to have some order around here. People are anxious to get paid and pull money out. It has been almost two weeks and life is at a standstill,” said Metwali Sha’ban, a volunteer making a list of customers to organise who would enter first.

With the political crisis still unresolved, banks may see panicky withdrawals of cash by Egyptians worried that access to their deposits could be restricted again.

Restricted working hours

Banks may also be nervous to trade with each other in the domestic money markets, a source of funding for them.

Some 341 bank branches, including 152 in Cairo, are opening across the country.

However, working hours will be restricted, and individuals will be limited to daily withdrawals of E£50,000 ($8,537) and $10,000 worth of foreign currency a day.

In nearby Tahrir Square, the focal point of nearly two weeks of protests against President Hosni Mubarak, soldiers were opening the doors of the main government administrative building, the Mugamma.

A line of Egyptians was lining up at doors in the back of the building that does not face onto the square.

Egypt’s healthy banking system is dominated by wealthy people as only 10 per cent of Egyptian population has bank accounts. So, the fear today is the fleeing of wealthy investors’ money overseas instead of direct withdrawal.

The shutting down of the domestic stock market and banking sector last week has temporarily halted the outflow of capital, but not before the bourse plunged 20 per cent and an estimated $1.5 billion of foreign money placed in Treasury bills left the country.