KUWAIT CITY, April 8: Treasury managers of local banks are planning to meet with the Treasury Officer of the Central Bank of Kuwait to make him aware of the pressures of surpluses of bank liquidity to which they are exposed, reports Al-Rai daily quoting reliable banking sources.
The sources pointed out the banks’ complaints about their surpluses may not be new, but this time they carry broader reading indicators, especially due to last month’s growth.
The sources pointed out that the treasury managers have not met with the Central Bank for a long time, and that they have experienced something new during the last period which deserves to be discussed. However, the sources say, any discussions in this regard will be like a compromise between banks and their regulatory system.
While no date has been set for the meeting between the treasury officials and the regulatory system so far, the sources pointed out that the most prominent points that banks intend to highlight with the Central Bank are the high levels of liquidity, to the rates difficult to regulate with traditional tools, pointing out that the trend to explore the possibility of opening new outlets has become the most debated issue between bankers on more than one level, and among treasury managers.
In recent months, banks have witnessed a new leap in their liquidity surpluses pointing out that the increase in these surpluses has resulted in the continued recovery of public debt payments by the banks in recent months, without any new outputs to absorb the liquidity resulting from these surpluses which came amid a slowdown in the introduction and implementation of development projects, and domestic credit which recorded limited growth. In this regard, the sources explained that a bank raising the price of a government deposit does not necessarily reflect a public banking need.
Rather, it is likely that the winning bank has a regulatory need to pay its benefits. It is useful that the banks usually resort to attracting such stable funds in an effort to regulate their due term. The sources said, while banks have succeeded in the recent period to reach positive settlements with some of its customers, has improved many of the centers of their budgets, but it resulted in an additional increase in the surpluses of liquidity, indicating that this increase in the adequacy of capital adequacy rates of all banks that rose to a large extent, at a time when the rates of inter-bank market transactions fell significantly.
The sources added that the meeting between treasury managers will discuss the tools available to exploit bank surpluses, as there are no large channels for banks to exploit their high liquidity, especially with the strictness and reservation it has been dealing with since the crisis broke out to finance and lend to customers and companies