A senior official of the United Arab Emirates (UAE) said on Saturday that national and foreign banks in the Gulf country enjoy a strong financial position, the official Emirates News Agency reported.
The UAE citizens own 75 percent of deposits in banks operating in the country, while Arab nationals and other nationalities own eight percent and 17 percent respectively, the UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi said in a statement.
Suwaidi is currently in Washington to attend the annual meetings of the International Monetary Fund (IMF) and the World Bank.
Banks' financing from the European commercial paper issues and medium-term notes accounts for only 9.9 percent of the total bank assets, the statement said.
As for the inter-bank deposits percentage, it is 12.7 percent to the total assets and most of these are owned by banks in the UAE.
The majority of assets of banks operating in the UAE are in the country and their parties are known and sound, contrary to what is there in other economies where most parties in these countries are unknown, the statement said.
In addition, the capital and reserves of banks operating in the UAE represent 11.02 percent of the total bank assets, which is considered high according to Basel II standards, the statement added.
The UAE Central Bank said on Wednesday a two-percentage-point cut in its lending rate to 3 percent in a bid to boost liquidity of local banks.
The bank also lowered the rate on its re-purchase of certificate of deposit (REPO) from 2 percent to 1.5 percent with effect from Wednesday.
On Sept. 22, it announced that it would set up an emergency lending facility worth 50 billion dirhams (13.6 billion U.S. dollars) for banks operating in the country.
Despite all the moves aimed to boost local banks' liquidity, the cost for banks to borrow money from one another has been on the rise.
The one-month Emirates Interbank Offered Rate rose to 4.66250 percent on Wednesday from 3. 64375 percent on Sept. 23.
Source: Xinhua
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