It seems that the battle for controlling stable deposits is still open at the bank, and that there are banks that do not mind paying high interest to win them, even if their prices sometimes approach the pricing rates for the loans they grant to a wide segment of clients, especially the elite.
In this regard, the daily learned from informed sources that 13 banks recently participated in the bidding on two deposits offered by a government agency, one of which is 25 million dinars, and the other is 20 million dinars, noting that both are for a year, noting that among the competitors there were two branches of external banks operating In the local market, while two banks participated in the auction, one of them local and the other a branch of a Gulf bank, without offering any prices, as only their participation was recorded, reports Al-Rai daily.
The sources pointed out that the winner of the two deposits, which is by the way a traditional bank, offered the highest price for the two deposits by pricing 5.85 percent on the 20 million dinars deposit, while offering an interest of 5.65 percent for the 25 million deposits.
The sources pointed out that it came in second place as the highest price for a bank that operates according to Islamic law, as it offered to win the two deposits in exchange for a price of 5.26 percent for each of them, which reflected a close competition for these funds.
The interest pricing presented in the government bid shows that there is a clear discrepancy in the interest rates offered by all banks, as the sources indicated that the results of opening the closed bidding envelopes showed after they were officially opened that there were 6 banks that offered prices exceeding 5 percent, while 5 others offered interest of less than 5 percent, while it was noted that the lowest price was far from the winner’s pricing rate of approximately 1.725 percent, as it offered an interest of 4.125 percent.
As has been the tradition for a long time in the market for deposits offered by this mechanism, the lowest prices came equally with a traditional bank and another operating in accordance with Islamic law, as both offered a price for the two deposits at 4.125 percent, which reflected the lack of a strong desire from the two banks to win the bid, and that their participation In presenting prices, it came for the purpose of maintaining the relationship with the government agency, which requests not to be absent from participating in the auctions of its deposits.
The sources said, “The reason for the banking race over stable deposits in Kuwait is not a shortage in the level of ‘circulating’ banking liquidity.
The sources stated that the degree of request for funds differs from one bank to another, and that this is confirmed by the discrepancy in the price list presented on the last two government deposits, indicating that if the purpose of liquidity was the same in all banks, there would be a great convergence in pricing, but the gap between the list of interest rates provided confirms Every bank’s need for money is of a different degree.
But in general, it is clear from the bank that winning stable deposits is still of great importance to all local banks, especially in light of the growing expectations that the wheel of interest rates will continue to rotate globally and locally, which requires action in advance from some banks to build new financial centers from stable deposits that are considered an addition to their role. In arranging the benefits scale, a major source of funds is in local banks.
The sources stated that the eyes of the banks are open to the Central Bank of Kuwait, awaiting its position on the US Federal Reserve’s decision, which decided at its meeting last Wednesday to raise interest by 25 points, to widen with that the margin between the US and Kuwaiti interest rates to 1 percent, “4 percent, the discount rate.”
It is noteworthy that, according to the data of the Central Bank of Kuwait, the deposit portfolio with banks finally reached 47.206 billion dinars, with a growth of 4.23 percent over a year.
The government increased its deposits in local banks during last January by 114 million dinars (3.41 percent) on a monthly basis and 494 million (+16.69 percent) on an annual basis, to reach about 3.454 billion. As for public institutions, they withdrew 433 million dinars from their deposits in January (-6.36 percent) to reach 6.376 billion, bringing its total withdrawals within a year, i.e. since January 2022, to 1.069 billion (-14.36 percent).
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