UAE Central Bank brings interbank market lending rates into focus

The UAE Central Bank has completed a study to bring more clarity and transparency to interbank market lending rates, Wam, the official news agency reported.

The Central Bank’s governor, Mubarak Al Mansoori, presented the study on the Emirates interbank offered rate in the UAE, also known as Eibor, at the 66th Meeting of the Committee for the Governors of the GCC Central Banks and Monetary Institutions in Riyadh last Wednesday.

“The Central Bank of the UAE presented its second-quarter report of monetary, banking and financial market developments in the UAE,” Wam said.

“In addition, it also presented a study on the latest proposed reforms to determine interbank offered rates between banks in the UAE to inform the plans in other GCC countries.”

No further details were given on the Eibor reforms. No one was immediately available to comment at the Central Bank as yesterday was a public holiday.

Talk of changing the way Eibor is determined comes at a time when the benchmark rate for the interbank market has been rising amid shrinking bank deposits.

The three-month Emirates interbank offered rate increased to a three-year high of 1.27 per cent on Thursday.

Unnamed banking sources told Reuters in April that the Central Bank planned to change the way banks quote indicative money market rates to make them more uniform and transparent.

The Central Bank reportedly engaged consultants Deloitte to study how individual banks calculate Eibor and recommend how quotes could be made more uniform as there have sometimes been large discrepancies among individual bank rates.

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