03:10 PM
Friday 01 April 2022
I wrote – Manal Al-Masry:
10 banks decided in the meetings of the Assets and Liabilities Committee “ALCO”, which is responsible for determining the interest on certificates, loans and deposits, to keep the interest on savings certificates unchanged.
The banks’ decision comes despite the fact that Al-Ahly and Egypt banks offered a high-return certificate of 18%, and customers withdrew their deposits in favor of the two government banks once morest the background of raising the interest rate from the Central Bank by 1%.
The banks that kept interest rates were Banque du Caire, QNB Al Ahly, Commercial International (CIB), Arab African International, Egyptian Agricultural, Med Bank, First Abu Dhabi, Egyptian Real Estate, Alexandria, and HSBC.
The interest rate on triple certificates with a term of 3 years in these banks ranges between 9% annually, 10% and a maximum of 11.25% annually.
Bankers in some private banks, who kept the certificate’s interest unchanged – justified their failure to keep pace with Al-Ahly and Egypt banks, due to the high average interest rate gap of 9.25% and the certificate return, which incurs losses for the rest of the banks.
Bankers who spoke to Masrawy clarified that Al-Ahly Bank and Egypt can bear the cost of paying an interest of 18% annually on customers’ investments in the certificate, as they are the central arm and help monetary policy to face the economic repercussions, which is different from private banks.
“A bank will not be able to reach the certificates’ interest to 18% or 15%, and therefore the result is the same, which is the continued exit of customers,” according to one of the sources.
The sources said that the banks are not concerned regarding the tendency of customers to break their existing certificates or withdraw part of their deposits in favor of the two largest government banks, as this high interest will incur potential losses for any bank that decides to offer it.
The deputy head of a bank in one of the government banks, who asked not to be named, said that the bank “has not and will not raise the interest on the certificates due to the inability to compete with the 18% certificate annually, which exceeds the ability of any bank and any customer who wants to break their certificate in favor of the 18% certificate will have their request implemented.”
An official in an Islamic bank said that it also cannot compete with the new certificate, which makes customers tend to break certificates or withdraw part of the deposits.
The proceeds of selling the savings certificate with an interest rate of 18% in Al-Ahly and Egypt banks reached the end of trading yesterday, Thursday, reaching 345 billion pounds during the first 11 days of its issuance, according to officials in the two banks to Masrawy.