The Central Bank of UAE announced Sunday the provision of additional liquidity to consolidate the banking system reassure investors shaken by the debt crisis of Dubaï. An announcement of the Central Bank, based in Abu Dhabi where concentrated oil wealth, occurred on the eve of the opening of markets in Dubai and Abu Dhabi where analysts fear a “Black Monday”.

Dubai Wednesday announced a moratorium of at least six months on the debt of his conglomerate Dubai World shortly after the closure of regional exchanges to leave the Muslim feast of Adha. But the announcement was very badly received by the markets Asian, European and American investors feared insolvency of Dubai for its government debt of 80 billion dollars.

In a statement released after three days of silence from the authorities, the Central Bank ensures that it “supports the UAE banks and branches of foreign banks operating in the country.”

She adds, “to provide these facilities for banks additional liquidity (…) at a rate 50 points above” the interbank rate.

The Central Bank says that “the UAE banking system is stronger than a year ago and has more liquidity”, referring to the global financial crisis that erupted last fall.

“The banking system consists of commercial banks with a solid base of stable deposits, and banks of this model has proved that it was best to deal with the impact of the global financial crisis,” writes the Central Bank.

With these measures, “the banks will be protected,” he told AFP UAE official who requested anonymity.

“It is a measure to calm investors (…) contracts should be calmer” on Monday, said for his part Analyst UAE Nasser Bin Ghaith.

“In practical terms, this decision has no direct impact (…) local banks have only a limited degree of exposure to Dubai World, unlike foreign banks,” he added.

Dubai announced Wednesday his intention to ask the creditors of his conglomerate Dubai World, the largest and most indebted, which controls including property giant Nakheel, a stay of six months, until May 30, 2010, payment Debt maturing.

HSBC British bank is the foreign establishment’s most exposed to the UAE, with loans worth 11.3 billion euros at end 2008, according to the UAE Bankers’ Association (EBA).

Faced with the difficulties of Dubai simmering since the start of the global financial crisis last year, the Central Bank intervened for the first time in February by purchasing 10 billion of the $ 20 billion worth of treasury bonds issued in early year by the emirate.

On Wednesday, two banks of Abu Dhabi, National Bank of Abu Dhabi and Al-Hilal Bank, for their part agreed to $ 5 billion of bonds issued by Dubai.

Both banks are covered by the Abu Dhabi Investment Council, an agency of the Government of the Emirate of Abu Dhabi, the richest of the seven members of the Federation which includes Dubai.

Abu Dhabi produces more than 90% of UAE oil, while oil reserves in Dubai are almost dry, which has pushed to diversify its economy.

Another Interesting Articles:

1. Are You The One Who wants to buy property in Dubai Located in United Arab Emirates, Dubai is beautiful and the development of the city that has recently begun a steady...
2. Online banking While it is time to open up a new Bank Account, it can look confusing and overwhelming to see about...
3. Internet Scams We’ve all heard of the scam tocomocho or the little picture, though it may seem a distant time. However, while...