Blom Bank Egypt says may launch products to support national currency

Blom Bank Egypt is studying the launch of new savings certificates for Egyptian pounds with a high interest rate to support the currency, the bank’s CEO Mohamed Ozalp announced Sunday.

This comes after the country’s two largest state banks; Banque Misr and the National Bank of Egypt (NBE) had launched earlier Sunday savings certificates for Egyptian pounds with an interest rate of 12.5 percent to support the currency.

Ozalp further told Amwal Al Ghad Sunday that Blom Bank Egypt is still studying the launch of a new savings product, which he said it would allure more liquidity and new segments of clients to the bank.

“They (Banque Misr and NBE) did this to support the pound and take pressure off foreign currencies. The central bank will have to hike rates in its next meeting, otherwise these banks will be under pressure with very low margins,” one banker told Reuters earlier today.

Egypt is facing a currency crisis due to what many economists say is an overvalued pound. It had allowed the pound to weaken to 7.9301 pounds against the dollar in October but the rate is still far from Saturday’s black market rate of 8.51 pounds to the dollar.

The central bank kept its overnight deposit rate at 8.75 and its overnight lending rate at 9.75 for the sixth consecutive meeting on October 29. It is due to meet again on December 17 under the leadership of a new central bank governor, Tarek Amer.

Blom is one of the Lebanese banks that expanded regionally over the past few years to diversify revenues and increase its market share in the Middle East. Blom has subsidiaries in Egypt, Jordan and Syria, as well as a representative office in the Arab Gulf region.