UAE banks may be allowed to use liquidity facility until March

Dubai: The United Arab Emirates banks can use the Central Bank's new emergency liquidity facility until the end of March but its size and drawing limits remain unclear, two banking sources said on Monday.

The Central Bank opened the new liquidity window for banks last month following Dubai's announcement that it would ask creditors of its flagship companies to agree to a debt restructuring .

"The facility is renewable for the period of one week from now until the end of March," one of the sources said.

The Central Bank said yesterday banks wishing to use the special additional liquidity facility may contact treasury for further direction but did not publish details. The Central Bank officials were not immediately available for comment.

The facility offered at 50 basis points above three-month Emirates interbank offered rates is available to all UAE banks and branches of foreign banks operating in the country and it is linked to banks' current accounts at the Central Bank.

"It is based on whatever limits the Central Bank has for individual banks, which we are not aware of," another source said.

"As of now we do not know how much money they can give us under this facility, we do not even know the overall facility size."

Any bank using the facility can swap funds from dirhams to dollars at par at any point in time with the Central Bank, the sources said.