Banks in UAE injected with first tranche of liquidityOctober 22nd, 2008 - 10:40 am ICT by IANS
Dubai, Oct 22 (IANS) The United Arab Emirates’ (UAE) finance ministry has injected the first tranche of 25 billion dirhams ($6.8 billion) into national banks in the country to boost liquidity and capital in the face of the global credit crunch.Each bank will receive support on the basis of its loan and credit portfolios, the ministry announced.
The ministry took the help of consultancy firm Mackenzie Associates and UAE Central Bank experts to come up with the details of the facilities, requirements and conditions to be met by the beneficiary banks, the state-run Emirates News Agency (WAM) reported.
Minister of State for Financial Affairs Obaid Humaid Al-Tayer had held a meeting Saturday with heads and chief executives of national banks.
In the meeting, held in the presence of Minister for Economy Sultan Bin Saeed Al-Mansouri and Central Bank Governor Sultan Bin Nasir Al-Suwaidi, Al-Tayer outlined to the bank officials the government’s support plan for them and asked them to furnish his ministry with details of the financial situation of their respective banks.
He said his ministry would attach strings to the government’s support facilities, including the need for beneficiary banks to finance trade and related facilities and provide financial assistance to businessmen and contractors engaged in the execution of infrastructure projects.
The minister also called for intra-bank assets cooperation and urged the banks to contribute in the financing of basic economic sectors to help sustain economic growth at a reasonable pace.
The move comes after the UAE moved 120 billion dirhams ($32.7 billion) to the Ministry of Finance over the last one month.
The UAE Central Bank had allocated 50 billion dirhams ($13.6 billion) Sep 22 as facilities for the banks operating in the country so that they could use them if required to avoid the current global financial crisis.
After markets in this Gulf nation, in line with others in the region and rest of the world, went into a free fall in the face of the global credit crunch this month, a further 70 billion dirhams ($19 billion) was transferred Oct 14 to improve the liquidity position of the national banks.
The UAE was among the first countries in the region to announce remedial measures like interest rate cuts and assurances of liquidity to the banking sector in the ongoing crisis.