Egyptians purchased LE39 billion ($5.5 billion) worth of Suez Canal investment certificates in six working days, more than half of the funds the government is seeking to enlarge the Suez Canal with another LE6 billion collected on Thursday. The certificates which are intended to finance a project to extend the Suez Canal were first issued on Thursday 4 September for Egyptians only. Many went to Egyptian banks with a patriotic sense of duty. "This is for the country; the return on LE100 is not so important,” says Fatma El-Sayed, a maid who was waiting her turn to buy certificates at Bank Misr. "I did not think a lot about the interest rate and have no intention to withdraw the money before their maturity,” says Sayed Nashat queuing to buy LE5,000 worth certificates at National Bank of Egypt. However, the certificates are financially enciting as the annual interest rate of 12 percent is higher than any other form of liquid savings. The maximum interest rate offered on deposits by Bank Misr and the National Bank of Egypt (Al-Ahly) is currently 10.5 percent on platinum certificates. The same banks offer 6.5 percent interest on savings accounts. Financial return on the certificates was still a factor for other buyers. "I will spend LE13,000 ($1,830) to secure some money for my children, the interest rate is better than any other,” says Doaa, a nurse. According Hesham Ramez, central bank governor, 90 percent of the funds raised were from individuals while only 10 percent were from institutions "I'll buy certificates for LE100,000 from my premium end of service that I had in a savings account with an interest rate of 6 percent. It is a good investment; the money was sitting unused," says a former oil company employee. In addition to a high interest rate, these certificates are guaranteed by the finance ministry and the central bank. Anticipating the influx of citizens, the central bank governor decided to extend bank working hours until 6pm for the first two weeks of issuance. Hani Guenena, head of research at Pharos investment bank believes there will be no negative effect on the ability of banks to lend, since the total amount the government requires does not even represent 10 percent of deposits. According to the Central Bank of Egypt, Egyptian pound deposits excluding the public sector amounted to more than LE1 trillion ($140 billion) in June while the total amount of loans offered by the banking system stands at LE584 billion ($82 billion). The certificates are issued at a value of LE10, LE100, LE1000 and its multiples, with a maturity of five years. Yield is to be distributed quarterly to owners of LE1,000 certificates and its multiples while it will be cumulative for LE100 and LE10 certificates. The National Bank of Egypt, Bank Misr, Cairo and the Suez Canal banks are the only ones authorised to issue certificates but clients of private banks can also buy through their banks. The aim of the government is to collect LE60 billion ($8.4 billion), needed for the digging of the Suez Canal expansion and six tunnels that will link the east and west banks of the canal. If the registration certificate does not cover the amount requested, a consortium of public banks will set up a joint loan for the remaining amount. http://english.ahram.org.eg/News/110528.aspx
