Business | Banking
UAE orders Dh70b fund transfer for banks
Shaikh Mohammad orders Dh70 billion fund transfer to pump liquidity into the UAE banking sector.
- By Babu Das Augustine, Banking Editor
- Published: 09:57 October 14, 2008
- Image Credit: Megan Hirons/Gulf News
- Investors watch the progress of domestic shares at the Dubai Financial Market.
Dubai: The UAE bourses reported record gains on Tuesday following the order from His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to transfer Dh70 billion to the Ministry of Finance to inject liquidity into the national banking sector.
With this, the UAE has pumped Dh120 billion into the banking sector in the past month. The Ministry of Finance and the UAE Central Bank will oversee the infusion of liquidity into the banking sector.
Buoyed by the news, the Dubai Financial Market Index closed up 10.76 per cent, its biggest single-day rise ever, and the Abu Dhabi Securities Exchange rose 7.5 per cent to close at 3,602.45 points.
Similar decisions to inject liquidity by the US and across Europe in recent days have strengthened investor confidence across the Gulf and global markets.
The US government on Tuesday announced that it would use $250 billion of its $700 billion bailout programme to buy into American banks. Nine large banks agreed to the plan to give the government equity stakes in exchange for new capital, officials said.
The Dow and the S&P 500 rose when the markets opened yesterday. Stock markets in Europe and Asia rose strongly for a second straight day of trading.
The Dubai Financial Market Index recouped most of the losses it made last week. The rally on local bourses has been attributed to a series of measures adopted by the UAE Government.
On Monday, the UAE Government said it would guarantee all bank deposits in the country, including those with foreign commercial banks.
The UAE Cabinet set up a higher committee to supervise the implementation of the precautionary measures taken by the Federal Government.
Mohammad Abdullah Al Gergawi, Minister of Cabinet Affairs, made the announcement on Tuesday.
The committee will be chaired by Obaid Humaid Al Tayer, Minister of State for Financial Affairs, and includes Sultan Saeed Al Mansouri, Minister of Economy, and Sultan Bin Nasser Al Suwaidi, Governor of the UAE Central Bank, as members.
Banking officials welcomed the move.
"This rapid and significant action by the Government of the UAE will further ensure that our banking and financial sector is safeguarded from the ongoing global financial crisis," said Abdullah Al Hamli, CEO of Dubai Islamic Bank.
Earlier this week other Gulf governments also announced measures to shore up the financial system.
With inputs from Babu Das Augustine, Banking Editor and Cleofe Maceda, Staff Reporter
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