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Egypt cbank says banks liquid for Sunday reopening

by (c) Copyright Thomson Reuters 2011. Click For Restrictions. http://about.reuters.com/fulllegal.asp | Thomson Reuters Foundation
Wednesday, 2 February 2011 15:30 GMT

* Bankers fear large transfers abroad, run on deposits

* Say cbank war chest could be depleted if unrest goes on

* Stock exchange to reopen on Monday if bank activity smooth

(Adds banker quotes, details, background)

By Patrick Werr

CAIRO, Feb 2 (Reuters) - Egypt's central bank reassured investors that the country's banks will have enough funds to deal with a possible run when they reopen on Sunday after a week-long closure caused by anti-government protests.

Bankers have warned that investors and Egyptians, spooked by protests that have closed down much of the economy since they broke out on Jan. 25, will seek to send funds abroad or convert them into cash.

"We are expecting that transfers out of the country and dollarisation will be unprecedented," said a treasury dealer at a medium sized bank in Cairo.

"Bank runs are the major concern -- whether the banks will have enough cash in their branches to pay depositors. You should expect long queues," he said.

Opponents and supporters of President Hosni Mubarak fought with fists, stones and clubs in Cairo on Wednesday in what appeared to be a move by forces loyal to the Egyptian leader to end protests calling for him to quit. [ID:nLDE71100I]

Bankers have said that the central bank's war chest of ${esc.dollar}36 billion in foreign reserves could be seriously depleted within weeks if the political situation did not stabilise quickly. [ID:nLDE70T0AN]

The stock exchange, which has also been closed, will begin trading one day after the banks reopen provided activity at the banks goes smoothly, its chairman was quoted by the official news agency as saying.

"The return of activity on the exchange on Monday is also conditional on the stability of activity at banks when they return," Khaled Serry Seyam told the official MENA news agency on Wednesday.

The central bank's deputy chairman said the banks would have enough funds to deal with the situation.

"The whole banking system will reopen," Hisham Ramez said by telephone. "They will be ready and liquid and everything."

Banks and the stock exchange were closed for a fourth straight day on Wednesday and would remain closed on Thursday, officials said.

(Editing by Toby Chopra)

Our Standards: The Thomson Reuters Trust Principles.

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