Egypt cenbank approves rules for providing emergency liquidity to banks

Central Bank of Egypt's headquarters is seen in downtown Cairo
Central Bank of Egypt's headquarters is seen in downtown Cairo, Egypt March 8, 2016. REUTERS/Mohamed Abd El Ghany

CAIRO, Jan 10 (Reuters) - Egypt's central bank said on Monday it had approved a set of rules under which it would be able to provide emergency liquidity to local lenders.

Banks can apply to receive emergency liquidity if they cannot get it from the interbank or financial markets, the central bank said in a statement.

Emergency liquidity will be made available to solvent banks only and for a maximum period of 180 days, it said. It will be priced at a premium of at least 5% above the overnight lending rate, it added.

Banks are unlikely to make much use of the new facility, which has been under discussion for more than a year, because funds available under the central bank's current overnight borrowing facility are cheaper, said two bankers contacted by Reuters.

Egypt's banks are facing a deterioration in asset quality due to the economic impact of the pandemic. The economy eked out growth overall in 2020 and 2021, with the help of government support packages for the hardest-hit sectors.

Reporting Moataz Mohamed, writing by Maher Chmaytelli; Editing by Gareth Jones and Hugh Lawson

Our Standards: The Thomson Reuters Trust Principles.