Mortgage Banking Strategies in Egypt, 1880-1914: Crédit Foncier Egyptien Investment and Local Borrowing

• Published in: Business history 2001-10, Vol.43 (4), p.29-47
• Main Author: Cannon, B.
• Format: Article
• Language: English
• Subjects: Banking industry; Banks (Finance); Loans; Statistics
• ISSN: 0007-6791; 1743-7938
• DOI: 10.1080/713999238

Foreign capital behind the Credit Foncier Egyptien (CFE) clearly dominated Egypt's inter-war mortgage market. Between its beginnings in 1880 and 1900, however, the bank faced serious difficulties, caused by over-investment in foreclosed lands that had to be sold at a loss in a depressed real estate market. This article traces several financial devices used by CFE to 'camouflage' its weaknesses, thus assuring that it could still attract foreign investors in bonds - borrowed money that was its only source for future lending capital. When the land market revived in the late 1890s, it had clearly shifted its mortgage lending strategy. The bank now preferred working with Egypt's bigger borrowers, some of whom used land as collateral for loans to diversify their own investments. It also worked to bring heavily mortgaged khedivial ('royal') estates onto the private land market after 1905. This not only assured the solidity of its accounts when the next slump hit; it established its reputation as the ally of the privileged landed class of Egypt.