Commercial International Bank will raise interest rates on its dollar-saving certificates, to be the first private bank operating in Egypt to take this step following suit of major state-run banks; the National Bank of Egypt (NBE), Banque Misr, and Banque du Caire.
The bank raised interest on three-year USD certificates to 5.25% monthly, 5% on five-year certificates, and 4% on seven-year certificates.
The NBE surprised the Egyptian banking market a few days ago when it adjusted the interest rates on its three “golden” USD savings certificates, and the Ahl Misr USD certificates for five and seven years terms for new issues starting from 9 October.
The new gold certificate gives an interest of 5.30% annually, 5.25% biannually, 5.20% quarterly, and 5.15% monthly. The minimum purchase amount for the certificate is $500 and its multiples.
As for the Ahl Masr USD certificate — which has a term of five years — yields an interest of up to 5.15% annually, 5.10% biannually, 5.05% quarterly, and 5% monthly. The minimum purchase amount for this certificate is also $500 and its multiples.
As for the seven-year-term Ahl Masr USD certificate, it yields an interest of 5.05% annually, 5% biannually, 4.95% quarterly, and 4.90% monthly. The minimum purchase amount for this certificate is $1,000 and its multiples.
In a similar move, Banque Misr also decided to raise the interest rates on its USD savings certificates. The yield for one-year term certificate became 5.30% annually, 5.25% biannually, 5.20% quarterly, and 5.15% monthly.
Meanwhile, the interest of the certificate with a five-year maturity will be raised to 5.15% annually, 5.10% biannually, 5.05% quarterly, and 5% monthly.
Moreover, Banque du Caire decided to raise the interest on its dollar certificates with a 3-year term to 5.15% per month, 5.2% quarterly, 5.25% biannually, and 5.30% annually.
As for the 5-year certificate, the yield stands at 5% per month, 5.05% quarterly, 5.10% biannually, and 5.15% annually.
The return on the 7-year certificate also increased to 4.90% monthly, 4.95% quarterly, 5% biannually, and 5.05% annually.
The move by these banks is the first step in re-pricing the savings vessels in US dollars in the Egyptian market, after the recent increases approved by the US Federal Reserve in the interest of the dollar, which was agreed upon during the meeting of treasury officials and bank money managers with the leaders of the Central Bank, headed by Hassan Abdallah.
Banks operating in the Egyptian market are heading to use the American Secured Overnight Financing Rate (SOFR) as a replacement of the London Interbank Offered Rate (LIBOR) in setting interest rates of dollar certificates. The LIBOR has been widely used since the 1970s as a reference rate for various financial instruments. However, it will be permanently phased out by June 2023.
The rates of dollar deposits in banks were previously set based on the LIBOR rate over 3 months plus 1%, provided that the rates on dollar savings certificates did not exceed 2.25%. The meeting discussed the possibility of using the SOFR as an alternative to the LIBOR in setting rates of savings vessels in dollar at banks.
During this meeting, they agreed on the possibility of setting rates of dollar deposits for less than one-year on the basis of SOFR over 3 months plus a margin, and setting rates of dollar deposits for terms of more than one year on the basis of SOFR over one year plus a margin.
As for the savings certificates in dollar, it was agreed during this meeting to reset their rates in line with the dollar interest rates globally.