Tuesday, Sep 15, 2009
Gulf News
Dubai: The liquidity in the UAE's banking sector is improving fast as the gap between loans and deposits has narrowed from Dh110 billion at the beginning of the year to about Dh40 billion at the end of July, said Shayne Nelson, Chief Executive Officer of Standard Chartered Bank, Middle East and North Africa.
"The liquidity of banks has improved substantially over the past few months due to the government and Central Bank support to the sector," said Nelson.
Speaking to reporters on the sidelines of a press conference to announce the sponsorship agreement Standard Chartered signed with Liverpool Football Club, Nelson said the current liquidity shortage in the banking sector is more structural in nature as bank deposits, especially the corporate deposits parked with banks, are relatively short term in nature, while their loans have longer tenures.
On the overall quality of assets of banks in the UAE, Nelson said banks across the board were affected by the deterioration in the quality of all classes of assets during the last three quarters and expects the volume of non-performing loans (NPLs) to peak in the current quarter and subside in the months ahead.
Crisis: 'Bankers to blame'The current economic slump is a result of irresponsible lending, senior Dubai Government officials said. Sami Al Qamzi, Director-General of the Dubai Department of Economic Development, said: "Banks failed to estimate the gravity of the situation and totally misread the situation and what was taking place before the crisis."
"Banks used to lend to individuals and companies under soft conditions and restrictions. They provided easy money that fuelled the price hike and cost of doing business and added to growing inflation."
"What the market is suffering from is a credit crunch which is caused by banks as well as a major capital outflow by institutional investors," Al Qamzi said.
- Zaher Bitar, Staff Reporter
By Babu Das Augustine, Deputy Business Editor
Gulf News 2009. All rights reserved.
