UAE Ministry of Finance announced that after its completion of paying the first tranche of the Banking Support facility declared by the Government, it is now in the process of paying the second tranche of AED 25 billion, with effect from next week, according to a Finance Ministry press release, reported the Emirates News Agency WAM.
The conditions of the second tranche will be close to the conditions attached to the first tranche, of which is to use funds to finance trade, and completion of all projects under construction, in order to ensure continuous economic growth in the country. However it should be noted, that banks which do not abide by the conditions of providing their financial statements as determined by the Ministerial Committee and the Central Bank, would not be eligible to receive payment, the press release explained.
The Finance ministry, on October 21, injected a first tranche of AED25 billion to boost liquidity and capitals of national banks. Each bank was scheduled to receive support on the basis of its loan account, its percentage from the grand total of the loan by the AED25 billion, the ministry explained.
The finance ministry solicited assistance from the Mackenzie and Associates, a consultancy company and Central Bank experts to come up with the details of the facilities, requirements and conditions to be met by the beneficiary banks.
The Minister of State for Financial Affairs, Obaid Humaid Al-Tayer, earlier on held a meeting with heads and CEOs of national banks. During the meeting, which was held in the presence of Minister of Economy, Sultan bin Saeed Al-Mansouri and Central Bank Governor, Sultan bin Nasir Al-Suwaidi, Al-Tayer outlined to the bank officials the government’s support plan for the banks and demanded from them to furnish his ministry with details of the financial situation of their respective banks.
He said his outfit will attach strings to the government’s support facilities, including the need for beneficiary banks to finance trade and related facilities, provide financial assistance to businessmen and contractors engaged in the execution of infrastructure projects.
He called for intra-bank assets cooperation and urged the banks to contribute in the financing of basic economic sectors to help sustain economic growth at a reasonable pace.
It’s worth noting here that, in a bid to immunise the national banking sector from the effect of the current global financial crisis, Vice President and Prime Minister of UAE and Ruler of Dubai, H.H. Sheikh Mohammed bin Rashid Al Maktoum, in line with the directives of President H.H. Sheikh Khalifa bin Zayed Al Nahyan, ordered the release of AED70 billion to the Finance Ministry. He also tasked the Central Bank and the ministry to come up with the right mechanisms to inject this liquidity into the banking sector. This brought to AED120 billion the total amount earmarked for this objective within a period of one month.
The Central Bank on September 22 provided facilities valued at AED50 billion for banks operating in the UAE for their use whenever the need for that arises. The move was part of the economic measures taken by the UAE government to support the banking sector and protect it against adverse effect caused by the current global financial crisis.
