The UAE Central Bank plans to change the way in which banks quote indicative money market rates to make them more uniform and transparent, banking sources said.
A panel of 11 banks submits daily quotes from which Emirates interbank offered rates (Eibor) are calculated. The rates, which range from overnight to one year, are used to price financial instruments in the Gulf's top banking centre, but they are often different from rates at which banks actually lend.
Commercial bankers said the central bank was concerned that there was too much variation between banks' Eibor quotes on any given day, because the banks were not following a standard procedure to decide the quotes.
Thursday's three-month Eibor quotes, for example, range from 0.65 per cent from National Bank of Abu Dhabi to 1.45 per cent from Union National Bank.
The central bank has therefore engaged consultants Deloitte to study how individual banks calculate Eibor and recommend how quotes could be made more uniform, although it is not yet clear what action will be taken, the sources said.
"They want the process to be standardised by the 11 banks," one banker said.
In a statement after a board meeting this week, the central bank said it had ‘instructed necessary action’ to be taken on Eibor, but it did not elaborate.