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Thu 25 Nov 2010 05:16 PM

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UAE central bank calls for lower interbank rates

Gap between EBOR and LIBOR rates 'must be bridged', central bank governor said

UAE central bank calls for lower interbank rates
REDUCED RATES: UAEs cbank governor has called for deposit levels to be raised to reduce interbank lending rates (AFP)

UAE banks need to raise deposit levels to reduce interbank lending rates and put them more in line with London Interbank Offered Rates (Libor), the central bank governor was quoted as saying on Thursday.

UAE interbank rates (EBOR) have stayed high over past months, sparking criticism from the central bank, although debt restructuring and a flood of dollar liquidity on global markets have helped to ease some of the pressure.

"The gap between the two prices (of EBOR and LIBOR) must be bridged," Sultan Nasser al Suweidi told local daily al Ittihad.

Deposits should rise by AED40bn ($11bn) in order to achieve this, he said, which would also help to narrow the loans to deposit ratio in the Gulf Arab state.

"This is not a big amount in comparison to the more than 1 trillion dirhams' worth of deposits in the banking sector in the UAE," he said.

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