Dubai: Bankers and economists are predicting a big boom in foreign deposits in the UAE following the government's decision to guarantee deposits in national banks regardless of the amount.
Ahmad Al Tayer, Chairman of the Emirates National Bank of Dubai, forecast that the UAE will benefit from the current credit crisis in strengthening its position as a safe heaven for deposits from all over the world.
He said the flexibility being exercised by the UAE in terms of taking swift decisions in times of crisis has always been a plus point, which benefited the UAE and the local economy in the past and in the present crisis.
Safe haven
Speaking to Dubai TV, Al Tayer said the UAE has traditionally been a safe haven for capital and deposits in times of crisis. "In the 60s of the past century and during the nationalisation wave in India, a lot of capital came here from the subcontinent looking for a safe haven in Dubai. This was repeated with Uganda. When Idi Amin came to power in Uganda in 1971, a lot of Asian businessmen residing and conducting business in the African country transferred their deposits to UAE banks," he said.
"In 1979 and following the Islamic revolution in Iran, many Iranian businesses deposited their money in the UAE. This was repeated on a large scale in the first and second Gulf wars in the 80s and 90s and in every other regional crisis. The UAE has created an image of being a safe haven for capital.
"I understand depositors' worries about their money. They have every right to do so and their panic is understandable due to the size of the current international crisis we are passing through," he added.
Abdul Aziz Al Ghurair, chief executive officer of Mashreq, said the assets of UAE banks have more than doubled in the past two years. The total value of assets managed by UAE banks has reached $1.2 trillion (Dh4.4 trillion).
Reflection of trust
This reflects the trust in the local economy and the high level of satisfaction the local banks have earned from their local and regional customers, he said.
In terms of assets, the UAE banking system tops the list of Arab countries and other countries in the region. At this point in time, people should not listen to rumours that cast doubts over the credibility of local banks, according to him.
Dr Nasser Al Saaedi, chief economist of DIFC, said: "The strength of the international economy is shifting east with China and India recording substantial economic growth in the past five years. Based on its sound banking system, the UAE can become an international-regional hub of banks and financial institutions to serve the flourishing economies in the region."
