Business | Banking
Three-month Eibor makes small adjustment
Reports of a depositor run on some banks are unfounded, banks and analysts say
- By Ahmed A. Namatalla, Staff Reporter
- Published: 00:00 December 1, 2009
Abu Dhabi: The debt restructuring at Dubai World had a less-than-notable impact on the banking sector yesterday, as reflected in a slight increase in inter-bank lending rates. The three-month Emirates inter-bank offered rate (Eibor) stood at 1.94 compared with 1.92 on Wednesday, the last day the rate was published before the Eid Al Adha holiday. Reports of a depositor run on some banks are unfounded, according to banks and analysts reached by Gulf News.
"The banks we've spoken with have not reported any unusual movements," said HC Securities banking analyst Janany Vamadeva. "A few retail investors may have panicked, but we have not seen deposit runs in either Dubai or Abu Dhabi-based banks," he said.
Vamadeva credited the Central Bank's existing guarantee on deposits and Sunday's announced backing of Dubai World debt as having helped avert a potentially sharper reaction from investors.
The National Bank of Abu Dhabi yesterday became the first and, as of press time, the only bank to report its exposure to Dubai World. The bank reported $345 million (Dh1.27 billion) in total exposure compared with a total loan book value of $34.9 billion (Dh128.3 billion).
In a statement, First Gulf Bank denied earlier newswire reports attributed to a senior executive regarding its exposure to Dubai World. The bank called the reports "incorrect and absolutely overstated".
Banks are not required to disclose their exposure to clients in the midst of a restructuring, but some do so voluntarily to reassure their investors.
Vamadeva said the fact that banks have not come out yet could mean their financial departments are not back yet from the extended holiday.
Dubai World last Wednesday asked for a six-month standstill on scheduled debt payments but has not technically defaulted yet, according to EFG-Hermes.
"There has been no default at this stage — technical or otherwise," the investment bank's research department said in a report yesterday.
The Central Bank spokesman was unavailable for comment.
On Sunday, the Central Bank announced it would make available an emergency credit facility for UAE banks and foreign banks with local presence to ease liquidity concerns.
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