Liquidity of banks operating in the country is good - Seif Al Shamsi
The UAE's central
bank has no intention of changing the minimum reserves for banks
as liquidity of banks operating in the country was good, a
senior central bank official was quoted as saying on Wednesday.
The central bank of the UAE, the world's third biggest oil
exporter, had no intention to modify the minimum mandatory
reserves for banks at the current stage, Seif Al Shamsi,
executive director for the treasury department at the UAE
central bank, told Arabic language daily Al Khaleej newspaper.
Lending in the UAE's banking sector have almost come to a
standstill when the financial crisis and the Dubai debt crisis
hit the region and the emirate's real-estate driven boom came to
Measures adopted by the central bank regarding banks'
liquidity reflect good conditions and do not call for central
bank intervention, Shamsi told the paper.
Money supply (M3) in the Arab world's second-largest economy
grew 5.1 percent year-on-year in October, the fastest rate this
year, after a 2.0 percent rise in the previous month, central
bank data showed.
Bank provisions for bad loans rose to AED39.6bn in October, the highest level this year, up 4.8 percent
from September and 36.6 percent from October 2009.
The UAE finance ministry said this month it expected to
launch a new credit bureau within the next six months to help
banks, already exposed to debts of Dubai's state-linked
companies, assess individuals' credit worthiness.
The central bank has given banks operating in the country
facilities with maturities of not more than three months in
September 2008 to help them cope with the effects of the global
Shamsi said in November he was still concerned about levels
of interbank offered rates despite an improvement.
UAE interbank rates have stayed high over past months,
sparking criticism from the central bank, with banks exposed to
Dubai debt, but debt restructuring and a flood of dollar
liquidity on global markets have helped to ease pressure.
The UAE three-month offered rate stood at 2.14375 percent
at the central bank's fixing on Wednesday, near its
lowest levels since January, but still above the Saudi benchmark
at 0.75125 percent