Bank chief urges action to boost UAE lending

CASH CALL: The chairman of Mashreq Bank on Wednesday urged a further cash injection into the financial sector. (ITP Images)

The UAE should inject more cash into the financial sector to catalyse lending and steer the economy through the global financial crisis, chairman of Mashreq Bank said in remarks published on Wednesday.

Abdul-Aziz al-Ghurair, also speaker of the Federal National Council, said the state should consider issuing government bonds and the country's sovereign fund should look into borrowing against its assets to inject liquidity into the sector, al-Khaleej newspaper reported.

"The government has several options to inject liquidity. It is possible for the moneys to be deposited in banks as government deposits so that banks can lend them on," he said.

"The government can also buy large debt from banks especially sovereign debt owed by government entities ... the central bank can also commence direct lending."

New lending in the UAE has lost steam in the last five months as banks become more prudent because they face higher borrowing costs and the prospect that some customers may default on real estate loans as property prices fall in Dubai.

The UAE central bank and finance ministry have together launched 120 billion dirhams ($32.67 billion) of emergency funding since September to help banks cope with tight credit conditions.

Ghurair said the UAE's wealth fund has "a significant amount of liquidity that can be available to mobilise the local economy and it can also borrow against the assets it holds."

The central bank governor has said he expects credit growth in the second-largest Arab economy would slow to no more than 10 percent this year, after soaring more than 50 percent in the year to June. (Reuters)

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READERS' COMMENTS

Mortgages
Posted by P.Fowler, Dubai, UAE on Thursday 5 February 2009 at 13:07 UAE time


I completly agree, Dubai and Abu Dhabi have an opportunity to put themselves on the world map at this time if they follow their previous policy of "who dares wins. They have always been brave now is the time to have the guts to lead on. Everybody will want to come to the tax free haven.
Mortgages will open up the market and stop this ridiculous downward spiral.

This is not rocket science!
Posted by Joe, Dubai on Wednesday 4 February 2009 at 12:11 UAE time


MORTGAGES!!!! Real Estate values will keep dropping until banks start loosening up their pockets and start loaning money for people to buy both Dubai and Abu Dhabi real estate. I hope banks do something soon...

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