US lender Citigroup will leave the interbank interest rate setting panel in
the UAE on June 25, reducing the size of the panel to 11 banks
from 12, the central bank said on Monday.
The move will further increase the dominance of local banks over foreign
banks in the panel that determines the Emirates interbank offered rate (Eibor),
which is used to price financial instruments in the Gulf's top banking
A spokesman for Citi declined to comment on the reasons for its withdrawal
when contacted by Reuters. The central bank said the exit was in line with
Citi's "globally implemented policy".
Since last year's scandal over manipulation of the London interbank offered
rate (Libor), banks around the world have been considering withdrawing from
panels which set indicative interbank rates, questioning the benefits of
participation given the potential risks to their reputation.
Last year Barclays agreed to pay a $453m fine to US and British
regulators over Libor manipulation, and last October it withdrew from the Eibor
panel, though there was no suggestion that it tried to manipulate Eibor.
Barclays was replaced by UAE lender National Bank of Fujairah, but Citi will
not be replaced. That will leave nine local and two foreign banks - HSBC and
Standard Chartered - in the panel.
The central bank also said on Monday that the two-month Eibor tenor would be
dropped from the panel's fixings, effective on December 10. Eibor rates run from one
week to one year.
A banker familiar with Eibor, who declined to be named, said the two-month
tenor was being dropped because it was rarely used. Citi's exit from the panel
is unlikely to affect rates significantly, he said.
The central bank said the next meeting of the Eibor panel would discuss
governance standards in line with recommendations by the Bank for International
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