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NBE, Banque Misr collect EGP 45.4bn in 10 days from certificates - Daily News Egypt

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NBE, Banque Misr collect EGP 45.4bn in 10 days from certificates

Banque du Caire attracts EGP 3.3bn and 5 banks to raise interest rates under government protection to investment certificates


The National Bank of Egypt (NBE) and Banque Misr succeeded in collecting more than EGP 45.4bn through the 12.5% interest certificate they issued, only ten days since the issuance of both certificates.

The National Bank of Egypt and Banque Misr put forward these certificates 1 November with an annual interest rate of 12.5%, to be received monthly.

The Platinum Certificate issued by NBE attracted liquidity worth more than EGP 31bn until last Thursday, according to a member of the Board of Directors at NBE.

The liquidity collected by the Banque Misr certificate amounted to more than EGP 14.4bn, its Chairman Mohamed El-Etreby said.

The Brimo Star certificate of Banque du Caire of 12.5% ​​interest attracted about EGP 3.3bn since it was launched on 2 November until last Thursday, according to the bank’s Chairman Mounir El-Zahid.

A survey conducted by Daily News Egypt until last Thursday showed that five private and specialised banks have raised their interest rates following suit of NBE, Banque Misr, and Banque du Caire.

These banks included Societe Arabe Internationale de Banque (SAIB), Industrial Development and Workers Bank of Egypt, Principal Bank for Development and Agricultural Credit, the Arab Investment Bank, and Misr Iran Development Bank.

The government also moved to raise interest rates on investment certificates of the National Investment Bank (NIB).

Daily News Egypt learned that the government’s decision comes after many clients sold their NIB certificates to buy the new certificates of NBE and Banque Misr.

Other banks are studying issuing similar saving schemes, while others are waiting for trend of the return values on treasury bills and bonds, in which they invest the majority of their liquidity in pounds before making any decisions regarding raising the interest rates on their saving schemes.

The return on treasury bills and bonds, however, remained stable during the last two weeks while the market awaits its trend during the upcoming period.

Both certificates issued by NBE and Banque Misr are attracting liquidity from different categories of citizens and from inside and outside the banking sector, NBE’s Chairman Hisham Okasha previously told Daily News Egypt.

Liquidity from schemes in both banks was already transferred to those certificates. They also attracted liquidity from other banks operating in the Egyptian market and new liquidity from outside the banking sector.

Okasha said the past few days; he witnessed dollar selling operations by citizens to buy the two new certificates. However, it is difficult to determine the value of the dollars sold.

Sources told Daily News that 80% of liquidity of certificates issued by NBE, Banque Misr, and Banque du Caire were transferred from other saving schemes within the three banks.

The sources said only 20% of liquidity came from outside the three banks, of which 80% came from other banks, and 20% from outside the banking sector.

The sources also told Daily News Egypt that only a limited number of people have given away dollars to acquire those certificates, and that those dollars were sold on the parallel market to exploit the exchange rate.

Board member of the Suez Canal and the Arab Sudanese Bank, Mohamed Abdel Aal said that raising the interest rate on the pound is a not a healthy traditional policy in the current circumstances. Raising the rate has a few positive and a few negative impacts.

Raising interest rates encourage depositors to keep the pound and to reduce the phenomenon of dollarisation as well as reducing the liquidity available to citizens. This helps the Central Bank of Egypt (CBE) to control inflation and putting Egyptians’ saving into the national economy.

“However, the move will reduce the role of private and household sectors in direct investment as an alternative to banks’ zero risks deposits schemes,” Abdel Aal said.

The high interest rate also lead to increasing interest rates on loans needed by businessmen, which will reflect on the price offered to citizens. He noted that this contradicts the state’s policy to reduce prices.

“Keeping a big difference between the dollar and the pound does not necessarily hinder dollarisation and curb the black market, because the demand on the dollar is inelastic,” he added.

Reducing interest rates will stimulate the national economy and improve the price competition among Egyptian exported goods. “Hence, it will increase Egypt’s foreign exchange from exports, while raising interest rates forces investors to move out of the stock exchange market and invest in the high interest safe investment schemes at banks,” he said.

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https://wwww.dailynewssegypt.com/2015/11/21/nbe-banque-misr-collect-egp-45-4bn-in-10-days-from-certificates/
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