Egypt's NBE steps in to buy Banque Misr's UAE operations after sanctions threat

National Bank of Egypt has stepped in to acquire Banque Misr's branches in the United Arab Emirates, the two Egyptian lenders ‌said on Tuesday, weeks after the branches were threatened by the US Treasury with sanctions over links to Iran. The US Treasury said on August 28 that it viewed the branches as a "critical node" for the Iranian government’s access to US dollars and proposed revoking Banque Misr UAE’s correspondent ‌banking access to US financial institutions.

Its proposed punishment was expected to come into effect in less than 30 days after a ‌public consultation period. The Egyptian bank said it was reviewing the notice while the UAE central bank launched an urgent examination of the branches. The UAE central bank has issued preliminary approval for NBE to acquire the branches, the two Egyptian lenders said in a joint statement on Tuesday.

"As part of its efforts to keep ⁠pace ​with the current development of foreign banking ⁠markets and the entailed requirements during the next phase, Banque Misr and the National Bank of Egypt announced a preliminary agreement on rearranging their banking presence in the ⁠United Arab Emirates," they said in the statement. They did not mention the sanctions and said that the potential deal comes within the framework of a ​common vision to integrate their external banking presence without disrupting services.

Both NBE and Banque Misr are owned by the Egyptian government. NBE ⁠says on its website that it has a representative office in Dubai. The UAE Central Bank, the US Treasury and the Financial Crimes Enforcement Network (FinCEN) did not respond ⁠immediately to ​requests for comment. NBE, Banque Misr, and the Central Bank of Egypt were also not immediately available for comment.

The UAE has historically been one of Iran's most critical economic lifelines and Dubai's banks have long held substantial Iranian-linked deposits, much of them immobilised ⁠under US sanctions. A close US ally, the Gulf state has been hit by heavy Iranian attacks during the early stages of the Middle ⁠East conflict, disrupting energy shipments, business ⁠activities and affecting air traffic.

Treasury’s FinCEN said in August that it had identified 103 potential Iranian shadow banking front companies using accounts with Banque Misr UAE between 2024 and June this year.