Absorbing bank liquidity IN A MOVE aimed at absorbing liquidity and containing inflation, the Central Bank of Egypt (CBE) reintroduced deposit operations starting on Tuesday. According to the new system, deposits with the Central Bank will have a seven-day maturity with a fixed annual interest rate of 10.25 per cent. Explaining the decision, the research department of Pharos, a leading investment bank, said that the CBE had apparently observed the build-up of excess liquidity at the banks and that the new step aimed at absorbing this liquidity to maintain high interest rates. The CBE deposit facility offers a rate that is higher than the overnight corridor deposit rate by 0.5 per cent, “probably to ensure that the minimum return on assets in the banking system is 10.25 per cent, which allows banks to raise deposit rates without compromising the return on equity,” Pharos noted. Since they gain a high rate of return on extra funds through this facility, the banks are not likely to raise rates significantly for other corporate and government borrowers. Baskindale bids for OTH BASKINDALE, a Cyprus-based telecoms group, has offered to buy 100 per cent of Orascom Telecom Holdings shares at $0.7 per share, putting the deal as a whole at $3.7 billion, according to a statement released by the Egyptian Stock Exchange. OTH, founded by Egyptian telecoms mogul Naguib Sawiris, is controlled by Russia's Vimpelcom, which is 47.85 per cent owned by the Russian Altimo Group which also owns Baskindale. The offer is currently being studied by the market regulator. According to news reports, VimpelCom is keeping its stake in the company, while OTH's CEO said that the company did not have background on the bid and that it had not yet been discussed by the board of directors. Beltone Financial said on Monday that the offer price was disappointing, valuing the company at $3,672 million, or 23.3 per cent below Beltone's own valuation of $4,789 million. If finalised, the deal will be the third that has seen a listed heavyweight leaving the market this year. In February, Egypt's regulator approved an offer by Qatar National Bank (QNB) to acquire Cairo's National Société Général Bank (NSGB). Orascom Construction Industries (OCI) is also finalising a deal with its Dutch-listed parent company OCI NV that may lead it to leave the Egyptian Stock Exchange. Sukuk law referred to Al-Azhar PRESIDENT Mohamed Morsi has referred a controversial draft law on Islamic sukuk bonds to Al-Azhar for approval, with Egypt's highest Islamic authority saying that the new bonds must be approved by scholars, as stated in the country's new constitution. The Shura Council, the upper house of parliament, which has a Muslim Brotherhood majority, approved the sukuk bond law last week, stating that it would not refer the bill to Al-Azhar for approval and sending it direct to president Morsi. The law allows the state and its related entities to issue Sharia-compliant debt both locally and internationally. The Ministry of Finance expects the first sukuk issue to take place within a couple of months and to yield $1 billion by June.
