UAE banks 'very solid with high liquidity'

12/05/2010 - Dubai Investment News
UAE banks 'very solid with high liquidity'

Posted by Neil King

The UAE's financial institutions are continuing to show signs of relatively high lending activity despite the present uncertainty in global financial markets, the governor of the UAE Central Bank has said.

Speaking to Oxford Business Group, Sultan bin Nasser Al Suwaidi said he was not overly concerned about lending risks because the majority of banks in the UAE are retail commercial banks.

"This means the system benefits from the inherent strength of business banking, while also having the advantages associated with retail," he said.

"Against this backdrop, UAE banks are very solid with high liquidity and a Central Bank which is supportive."

Mr Al Suwaidi confirmed that with the global economic recovery still in its early stages, the Central Bank will continue with its "two-pronged approach" of ensuring that the banking system has sufficient liquidity while exercising indirect control on credit expansion.

He added that despite such stewardship, decisions on lending ultimately rest with individual banks, whose judgments are based on their local knowledge of both customers and the economic climate.

"The UAE economy is open, dynamic and robust. Banks will decide what opportunities are right for them," said Mr Al Suwaidi.

Meanwhile, the Khaleej Times reported this week that the long-awaited Free Trade Agreement between the Gulf Cooperation Council and the European Union is likely to be signed next month.
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