The Egyptian government yesterday shocked foreign investors from Qatar National Bank (QNB) with an unexpected 10 percent capital market tax on the complete acquisition of shares in National Societe Generale Bank (NSGB), its second biggest private bank.

Economically weakened by political crisis, budget deficit, and a failing currency, Egypt announced in December intentions to put a 10 percent levy on major transactions on the stock market, as part of measures to increase revenue.

It however did not disclose when the tax would take effect.

“The announcement caught investors off guard as Egypt’s regulator had only approved the takeover last month,” a report by 4-traders said.

Analysts have said that the unexpected introduction of the levy could repel foreign investors needed to restore the ones robust economy.

Cairo-based economist Osama Mourad was displeased. “This is like robbing investors,” he said.

Hani Helmy, chairman of El Shorouq Brokerage in Cairo, said the decision to apply the tax was “very, very bad and undermines confidence (in the market)”.

50 percent states owned-QNB initially bidded for a 77 percent share in NSGB but Egypt’s regulator insisted a 100 percent acquisition.

The sharp drop in the Egyptian bank’s shares on Tuesday may make QNB question whether it had overpaid. QNB, 50 percent owned by Qatar’s sovereign wealth fund that has led the bulk of the gas-rich Gulf state’s international acquisitions in recent years, had offered 38.65 Egyptian pounds ($5.67) per share for NSGB, which at the time was a small premium to NSGB’s share price.

After Tuesday’s battering NSGB is worth only 34.65 pounds ($5.1).