UAE central bank pledges to "stand behind" local banks

30 November 2009

United Arab Emirates' (UAE) central bank has promised to "stand behind" local and foreign banks in the state – but refused to specifically mention Dubai in its pledge to hand out fresh funding where needed.

Last week's debt restructuring by state-owned Dubai World hit global markets with billions of dollars owed to banks around the world.

Dubai is one of the seven semi-autonomous city states that make up the UAE but many of its executives, investors and federal officials who worked closely with Dubai World were not given advance warning of the debt-standstill announcement, reports the Wall Street Journal.

Along with UAE, Abu Dhabi has yet to publicly pledge support for Dubai, despite bailing out the country with $10 billion earlier in the year.

Dubai borrowed $80 billion over a four-year period in order to fund a series of luxury building developments.

But the global financial crisis has seen property prices collapse by 50 per cent on their 2008 levels, contributing to last week's announcement.

By Asim Shah

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