Gulf banks on alert for hot money from Egypt
Most of the money leaving the two countries forms part of the capital flight that bankers say is to be expected during a crisis, but the asset freezes mean close monitoring was needed.
"There's been a substantial inflow of funds from countries including those [two] in the past week," said the chief executive of a UAE bank, who asked to remain anonymous.
Egypt's public prosecutor froze the assets of Rachid Mohamed Rachid, its former trade minister, on Friday, days after he was ejected from the government as Hosni Mubarak, the president, moved to address protesters' complaints.
Abdel-Meguid Mahmoud, the prosecutor, issued the order against Mr Rachid, a former Unilever executive, "as a precautionary measure" until investigations are concluded, the official Middle East News Agency reported.
Mr Mubarak ordered that businessmen be axed from government and the ruling party under plans for political reform. Other high-profile names were also removed in the shake-up, including: Ahmed el Maghraby, a property developer and hotelier; Ahmed Ezz, the chairman of Ezz Steel, Egypt's biggest steel producer; and Zoheir Garranah, a former tourism minister. They were banned from travelling abroad and had their bank accounts frozen, Middle East News Agency reported.
The asset freeze and travel bans in Egypt follow similar action against members of Tunisia's former regime.
The EU froze the assets of 46 associates and relatives of Zine el Abidine ben Ali, the ousted Tunisian prime minister, according to media reports on Friday. Switzerland has already frozen accounts and assets connected with the exiled Mr ben Ali.
Protesters in both countries have expressed concern that officials may seek to move cash abroad as unrest grows at home. A poll by Reuters showed half of money managers in London and Switzerland reported a pick-up in inquiries from rich Middle East families about moving their money from the region.
"Gulf banks will be monitoring inflows," said Murad Ansari, a financial analyst at EFG-Hermes, based in Egypt. "It's difficult to say the extent of flows to the Gulf, but any money flowing from Egypt will be large."
Alastair Newton, a senior political analyst at Nomura International, said asset freezes were a sensible step to minimise potential losses during a crisis.
In his six years in office, Mr Rachid made frequent visits overseas in search of foreign investment.
He had set a target of US$20 billion (Dh73.46bn) to be raised in three years, mostly through private partnership deals to build much-needed infrastructure in Egypt.
While Mr Mubarak's government scrutinises the finances of its former ministers, the president's own bank account has also fallen under the spotlight. His family fortune has been estimated at between $40bn and $70bn, Professor Amaney Jamal, a political science lecturer at Princeton University, told ABC News last week. Much of the wealth is believed to be in UK and Swiss banks or invested in London property.
Mr Mubarak's sons, Gamal and Alaa, are also billionaires.
Updated: February 6, 2011 04:00 AM