Funds parked with UAE cenbank; banks haven’t used credit facility set up after debt crisis.
UAE banks have surplus funds parked with the central bank and haven’t used a credit facility set up after Dubai World announced plans to restructure debt, a central bank official said.
“It has never been used,” Saif Shamsi, senior executive director for the treasury department of the Central Bank, told reporters when asked whether banks have drawn on the emergency facility. “Banks have surplus funds with us.”
The central bank on November 29 announced a special additional liquidity facility at the rate of 50 basis points above the three months EIBOR. Dubai World announced on November 25 that it would seek to freeze or delay repaying debt until at least May 30. The company said December 1 it wants to alter terms on about $26bn of debt.
Since the global credit crunch began, the government has offered liquidity facilities to banks, lowered the repurchase rate and is discussing a proposal to guarantee bonds issued by local lenders. Abu Dhabi and the federal government have lent $20bn to Dubai, the second largest emirate, to support it as it struggles with at least $80bn in debt.
The UAE economy will grow between 2.5 and 3 percent this year, Economy Minister Sultan bin Saeed al-Mansouri told reporters today at a conference in Abu Dhabi. He had forecast a 3.2 percent expansion on December 13.
Growth in 2009 was forecast at 1.3 percent, the lowest since Bloomberg records began in 2002.
Inflation in the UAE should be no more than 2 percent this year after slowing from record highs above 12 percent in 2008, the minister told reporters today. Inflation slowed to an average of 1.6 percent in 2009, the Ministry of Economy said on February 14.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
If those funds were never used. WHy did they took the money from Abu Dhabi.
The Central bank website shows the Eibor rates (http://www.centralbank.ae/pdf/EIBOR/eibor_today150210.pdf). HSBC, as an example, states it Eibor rate as 1.95 but yet they are offering 4% to the retail deposits. This can only be because they cannot access cheaper funds of the Central Bank at Eibor+0.5, an effective ratae of 2.45.or else would they pay 4% instead of 2.45%?