UAE guarantees all local bank account deposits
Posted on 12 October 2008 with no comments from readersABU DHABI (AFP) — The oil-rich United Arab Emirates said on Sunday that it will guarantee deposits and savings in local banks to protect depositors in face of the global financial turmoil.
The UAE cabinet also decided to ensure that no local bank will be exposed to credit risks and to guarantee inter-bank lending among all banks operating in the country, state WAM news agency reported.
The UAE — the first oil-rich Gulf country to take drastic measures to protect depositors from the global financial meltdown — will also pump the necessary liquidity into the banking system if required, WAM said.
The cabinet’s “preventive” measures are aimed at “ensuring continued economic growth and protecting the national economy,” it added.
“We are serious in protecting our financial system and banking sector,” said Prime Minister Sheikh Mohammed bin Rashed al-Maktoum.
WAM also quoted UAE President Sheikh Khalifa bin Zayed al-Nahayan as stressing that the UAE economy is sound and its banking sector solid.
The moves came as the two stock markets in the UAE, a country in the midst of an economic boom, continued to slump, pulled down mainly by the real estate sector.
The cabinet’s guarantee of savings and deposits covers most retail banks operating in the UAE, including those used by foreign residents.
On Wednesday, the UAE central bank slashed its lending rate to banks by two points to three percent and its benchmark rate by 0.5 point to 1.5 percent in a move to raise market liquidity.
The move came after the US Federal Reserve cut the key federal funds rate by half a point to 1.5 percent as part of a coordinated world effort to halt the meltdown of financial markets.
