Dubai Crisis and Gulf Banks, the Plutocrat Next Door, the Shaikh next Door………
“The bank did not give more details, only saying that it stood behind UAE banks and branches of foreign banks operating in the UAE, adding the Gulf Arab country's banking system was more sound and liquid than a year ago. "It is important because the main concern is that there might be some panic behavior by depositors in Dubai and by bankers who want to take deposits out of the banking system……..The central bank is sending a strong message to everyone that they are providing ample liquidity and the guarantee to banks in the UAE," he said. State-run Dubai World had $59 billion of liabilities as of August, a large proportion of Dubai's total debt of $80 billion and repayment of Nakheel's $3.5 billion worth of Islamic bonds, which were originally due to mature on December 14, was widely expected by the market to be met……… Last year, the UAE finance ministry poured $6.8 billion into bank deposits, the first tranche of a $19.1 billion rescue facility it set up to help lenders weather the onslaught of the global credit crisis. It deposited another $6.8 billion into banks in November 2008, but has not made any statements since regarding the remainder of those funds. This came after the central bank set up a $13.6 billion emergency bank lending facility to combat the crisis……….”
They had no choice, given that nearly 90% of the population is composed of foreigners who need to be able to remit money home and worry about their savings more than the citizens. Besides, the credibility of commercial banks and their management around the Gulf is not particularly high right now; any reassurances they might try to give will sound hollow. They depend on the government support as much as the shaikh or plutocrat next door, but often pretend not to.
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mhg
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