Government stands by pledge

The Government will fulfill its pledge to guarantee deposits at distressed local and international banks, says finance minister.

ABU DHABI // The Government will fulfill its pledge to guarantee bank deposits, Obaid Al Tayer, the Finance Minister said on Tuesday according to a report on Zawya Dow Jones. "So far the UAE has contributed about 14 per cent of GDP to its banking sector," Mr Tayer told the Federal National Council. "Other countries such as Russia and Germany have contributed much less so the government has taken very good steps and put in more liquidity than other countries to deal with this crisis."

He added that the Dh120bn (US$32.69bn) facility for distressed local and foreign banks operating in the country was generous when compared with other countries. In October the Government announced it increased its existing bank support fund to Dh120bn, in response to the global liquidity crisis. At the time, bankers said they expected the new funds to be deposited with banks to alleviate the tensions that had pushed up interbank lending rates. Few details of the fund have been released since then. However, Mr Tayer said the Government stood by its promise to make the money available.

"We have not put limits on how much we are guaranteeing but we need time and there are a lot of procedures that have to be done beforehand if this is to be done properly," Mr Tayer said. [e-mail]