A senior Arab banker asserted on Friday that the success of recent negotiations between Egypt and the International Monetary Fund (IMF) to give a total loan of $12 billion to Cairo will significantly increase the flow of foreign investment to Egypt.

Union of Arab Banks chief Wessam Fattouh, who was speaking on the sidelines of a conference of the union in the Egyptian resort city of Sharm ElSheikh, expected the largest of foreign investments to come from Arab Gulf states.

He said that the initial approval of the IMF to help Egypt with the loan confirms that Egyptian economic reforms are going in the right direction.

World lenders approve loans if they are sure that economic reforms are serious, Fattouh said.

"The confidence in Egypt's economic outlook and Cairo's ability to repay the loan is the motive behind the success of the talks," he said.

He expected the step to positively affect the banking sector in Egypt.

"No doubt this will also positively reflect on banks and Egyptian financial institutions and will support their projects," he said.

He noted that Turkish banks seek cooperation with Egyptian banks.