National Bank of Fujairah has been chosen to replace Barclays on the panel which sets the United Arab Emirates’ indicative interbank lending rates, banking sources told Reuters on Wednesday.
Barclays said in July it was withdrawing from the panel which determines the Emirates interbank offered rate (Eibor), weeks after it agreed to pay a $453 million fine to U.S and British regulators over manipulation of the London interbank offered rate (Libor).
There has been no suggestion that Barclays tried to manipulate Eibor, which is used to price financial instruments in the Gulf’s top financial centre.
NBF, the 11th-largest bank by market capitalisation in the UAE, beat out India’s Bank of Baroda for the spot on the 12-member panel in a vote of panel members, three banking sources with knowledge of the matter told Reuters.
The arrival of NBF is unlikely to influence Eibor levels significantly; daily quotes are calculated using an average of the submissions of all 12 panel members, minus the two highest and two lowest.
But the appointment shifts the balance of the panel further toward local banks. Before Barclays’ withdrawal, it consisted of eight local and four foreign institutions including Citigroup, HSBC and Standard Chartered.
“We are talking about the emirates rate so you need to have representatives of the seven emirates” in the UAE, said an Abu Dhabi-based treasury banker, who wasn’t one of the sources. “Now all are represented except Ajman and Umm al-Quwain.”
NBF will assume Barclays’ position on the panel once a 90-day mandatory notice period has been served by the British bank.
The sources spoke on condition of anonymity as the information is not yet public. Officials from NBF and the central bank declined to comment.
NBF had assets of 15.9 billion dirhams ($4.3 billion) at the end of June and made a net profit of 135.5 million dirhams in the first six months of this year, up 8.2 per cent on the corresponding period of 2011, figures on its website showed.