01:18 PM
Friday 06 January 2023
I wrote – Manal Al-Masry:
The National Bank and Egypt allow its customers the freedom to break their certificates to buy back the certificate with a high return of 25%, but each type of it with the two banks is subject to different standards, including the period that has passed since the certificate was linked, as well as the outcome of the certificate that came from new issues or renewal of existing certificates for a customer earlier. As well as the size of the fine.
On Wednesday, Al-Ahly Bank and Misr Bank surprised the market with a decision to offer a one-year savings certificate with an annual return of 22.5% that is spent monthly and 25% annually that is spent at the end of the certificate’s term, which is the highest at the level of the banking system in many years.
Among the conditions for breaking any certificate that has passed 6 months since its purchase, with the exception of renewals that took place on existing certificates that were not broken, are not subject to this restriction due to the continuation of their link without depositing them in the customer’s account.
The branches of the National Bank and Egypt witnessed a turnout from customers this morning, the second day of issuing the certificate, to ask regarding the possibility of breaking existing certificates for them and returning their proceeds to purchase the certificate with a high return of 25% for fear of the speed of its closure and following the difficulty of obtaining loans with its guarantee.
In the following lines, Masrawy presents the types of certificates most frequently traded among customers in Al-Ahly Bank and Egypt, and the possibility of breaking them to purchase a 25% certificate.
Certificate with an interest rate of 17.25%
The bank does not allow customers to break this certificate to buy back 25% because 6 months have not passed since its issuance, as no more than two months and a few days have passed since the date of its issuance in the two banks, except in one case only.
The bank excludes some customers from the restriction that 6 months have passed since their purchase, and they are the ones who had existing certificates that were automatically renewed on this type of certificate without breaking it and entering it in the savings account, which allows them to break it and buy the certificate with a high return of 25%, which is a deduction of a specific fine.
On October 27, the National Bank of Egypt issued the triple certificate with a fixed return of 17.25%, and the periodic exchange of the return at the end of each year, which coincided with the second liberalization of the exchange rate.
Certificate with interest rates of 16% and 16.25%
This certificate is subject to the same conditions as the previous certificate, 17.25% in the difficulty of breaking it because 6 months have not passed since its purchase, unless existing certificates for some customers are renewed with the expiry date for this type of certificate.
On the same day as the certificate issuance, the National Bank of Egypt issued a 17.25% triple certificate with an interest rate of 16%, the return is paid monthly, and 16.25%, the return is paid quarterly.
Certificate at 14% interest
In this type of certificate, Al-Ahly Bank and Egypt allow it to be broken as a result of the passage of 6 months for some issues to customers, but recent issues that have not passed 6 months will be difficult to break due to the same previous reasons.
On May 30, Al-Ahly Bank and Egypt issued a 3-year certificate with an interest rate of 14% annually, the return is paid monthly, and its issuance came with the suspension of the certificate of 18% with a one-year term, i.e. 6 months and 4 days have passed since its first issuance until the date of writing this report.
Certificate at 18% interest
Although it is possible to break this certificate with a deadline of one year for all clients who issued it, as a result of the lapse of 6 months from its purchase, it is not preferable to break it because of the fine imposed on it, which amounts to 70% of the total return obtained.
The National and Egyptian Banks issued an 18% certificate on March 21, coinciding with the first wave to liberalize the exchange rate of the pound during 2022, and work on it was suspended 71 days following its issuance to collect the target proceeds of 750 billion pounds.
The two banks also offer many other certificates with different terms of 5 years, 7 years, 1 year, 2 years and 3 years, but they are not as popular as the aforementioned certificate.
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