UAE banking system faces $30bn 'gap'

BANKING SYSTEM: UAE faces $30bn gap says central bank governor. (Getty Images)

Loans at the UAE's banks exceeded customer deposits by 110 billion dirhams ($29.95 billion) and the government was looking for a way to bridge the gap, the UAE central bank's governor said on Monday.

"The current situation requires a stimulus plan for banks and the economy in view of this 'gap' which could be bridged in collaboration with the Ministry of Finance," said Sultan Nasser al-Suweidi, according to state news agency WAM.

The UAE central bank last year set up a $13.6 billion credit facility to ease lending, and said it would pump another $19 billion into the banking system. It also guaranteed deposits of all local banks and some foreign lenders.

Al-Suwaidi said last month that he was working on a plan to lower interest rates on corporate deposits.

The current economic stimulus package accounts for 6.9% of the country's gross domestic product, making it one of the highest in the world, Al-Suwaidi said. 

The package also includes a 50 billion dirham central bank funding facility for banks.

Dubai's government has sold $10 billion in bonds to the UAE central bank to help state-linked companies meet their financial commitments. (Reuters)

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