Egyptian public and private banks are competing to raise the interest rates of certain services, which some experts consider an attempt to attract deposits and provide liquidity for government domestic borrowing, after sources dried up after financing the budget deficit for four whole years.
The National Bank and the Misr Bank raised the interest on medium and long term deposits and certificates from 9.5 percent to 11.5 percent, which has prompted other financial institutions to do the same. These include the National Development Bank, which is owned by the Abu Dhabi Islamic Bank, the Urbanization and Housing Bank, Crédit Agricole, the United Bank, the Suez Canal Bank, BNP Paribas, the Commercial International Bank and Societe Generale.
A high-level banking source said the central bank issued verbal instructions to raise the interest rates of the Egyptian pound in order to avoid the recent high demand on the US dollar, known as the “dollarization” process, despite the low interest rates on the US currency.
“The bank aims to maintain the current deposits by raising interest rates,” said Fathi al-Sebaei, chairman of the Urbanization and Housing Bank.
Another source said banks are thereby trying to provide liquidity for major projects, and satisfy the household retail sector, which represents a large segment of customers.
Financial expert Ahmed Adam said that, according to the latest Central Bank report at the end of July, the total deposits amounted to LE972.8 billion, compared to a domestic debt of LE1 trillion.
Translated from the Arabic Edition
