UAE cenbank to support banks with Dubai World exposure

Central bank's move aims to ease concerns about stresses in emirate's financial sector.
UAE cenbank to support banks with Dubai World exposure
By Rania Oteify
Mon 14 Dec 2009 12:25 PM

The UAE's central bank moved to ease concerns about stresses in the financial sector on Monday, saying it would back local banks who have exposure to debt-laden holding company Dubai World.

"(The) central bank of the UAE reaffirmed its position that it stands behind UAE banks, including those with exposure to Dubai World and Nakheel," the central bank said in an emailed statement.

Nakheel, builder of palm-shaped islands off Dubai's coast, is the property arm of Dubai World.

Dubai said on Monday it had received $10 billion from fellow UAE member Abu Dhabi, $4.1 billion of which was allocated to Nakheel to repay its Islamic bond maturing on Monday.

The UAE central bank said the financial sector was more sound and liquid than a year ago. Interbank deposits in the banking system constitute 10.3 percent of liabilities, with foreign interbank deposits constituting 5 percent, it said.

A source close to the Dubai government said earlier on Monday the central bank would be there to inject liquidity as needed into banks that face exposure to Dubai World.

The central bank set up a special emergency facility last month to support bank liquidity in response to Dubai's debt woes, which had threatened to damage lending and derail economic recovery. The special facility has been left open-ended. (Reuters)

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