By Hossam Mounir

In the last week, banks have invested over EGP 159bn in local currency liquidity in the Central Bank of Egypt (CBE), according to CBE statistics.

The investments were also made in treasury bonds and treasury bills issued by the government.

The banks invested EGP 138bn in the CBE in the form of deposits from one night to one week, and the banks invested EGP 20.75bn in treasury bills and bonds.

According to the CBE, in the first four days of last week, banks deposited EGP 63.777bn in the corridor system followed by banks to invest their local currency surplus for one night, with revenues at 8.75%.

Banks also deposited EGP 75bn for one week within the deposits system, in which the CBE takes the banks’ local liquidity surplus which is then invested with revenues of 9.25%.

The CBE’s statistics also revealed that banks invested EGP 15bn in treasury bills for 91 to 375 days, with revenues at 11.5% to 12.45%. They additionally invested EGP 5.75bn in treasury bonds for a period from 18 months to 7 years, and with revenues at 12.65% and 14.595%.

“Banks’ investments are governed by many regulations, the most important of which is obtaining the highest revenue possible and the convenient investment time to the form of cash liquidity being received. Each form of investment has its own rates by the senior management of CBE which cannot be violated,” said Head of Treasury at the Housing and Development Bank Ahmed El-Khouly.

El-Khouly adds that the liquidity that goes into banks is either short-term, middle-term, or long-term, through deposits, saving certificates, or saving accounts. Thus, banks look for investments convenient to the term of the liquidity.

Loans given to companies or individuals are the most important form of investing the bank’s liquidity, and it also gives the highest revenue on investments, as per El-Khouly. The rest of the liquidity is invested in treasury bills and treasury bonds issued by the government or CBE within the corridor system or the deposits system.

CBE deposits are the last resort for investing the liquidity of banks, because it achieves the lowest revenue on investments, added El-Khouly.