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Curb rumours to revive trust in the markets
The UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi on Monday assured the banking and financial community that the country's banking system could withstand the impact of the current meltdown, quashing any rumours of a large-scale liquidity crunch.
- Gulf News
- Published: 23:31 October 28, 2008
The UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi on Monday assured the banking and financial community that the country's banking system could withstand the impact of the current meltdown, quashing any rumours of a large-scale liquidity crunch. The banks' healthy third quarter results are a good testimony to it.
Interestingly, the Governor admitted that a correction in the UAE's real estate market could happen, but the banks will be able to weather the impact.
"The UAE banks are well cushioned and we could go to a lower level," he said, without elaborating. "The UAE banks' exposure to the subprime and structured investment products, credit default swaps is 1.2 per thousand."
He also said that the banks have availed themselves of only 15 per cent of the Dh50-billion facility created by the Central Bank to support the financial system, in case of any shortage - again proof that the requirement is not that strong.
Suwaidi, however, supported bank mergers.
The government has already topped up the facility with an additional Dh70-billion package, in addition to guaranteeing the bank deposits for three years. The latest assurance by the Governor is heartening though it might fall short from stopping the market from sliding further. Despite repeated government assurances, market sentiments have not been very positive.
One might wonder what is really going on or what is going wrong with the economy. Rumours flow faster than news, and could hamper public confidence. While the UAE Government has taken the necessary measures, it is now the responsibility of other stakeholders to help revive consumer and investor confidence.
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