Jefferies Says #UAE Injected $8 Billion Liquidity to Help Lenders - Bloomberg

Jefferies Says UAE Injected $8 Billion Liquidity to Help Lenders - Bloomberg

Analysts at Jefferies Financial Group Inc. estimate the United Arab Emirates’ central bank injected more than 30 billion dirhams ($8.2 billion) into the banking system to help protect against the impact of the Iran war.

Data from the Central Bank of UAE shows commercial lenders used a tool known as a Contingent Liquidity Insurance Facility, Naresh Bilandani, Jefferies’ head of equity research for Central and Eastern Europe, Middle East and Africa, wrote in a note to clients on Thursday. The CLIF was introduced in 2022.

The central bank rolled out a support package earlier in March that aimed to boost liquidity and lending capacity in the UAE’s financial system.

The UAE’s central bank didn’t respond to requests for comment.

The central bank “may, on a contingent basis and at its own discretion, activate the CLIF in response to actual or prospective stress of an exceptional nature, which could be market-wide or idiosyncratic,” Bilandani said. “CLIF allows banks to draw on CBUAE reserves against different sets of collateral and is designed to be flexible to respond to evolving market conditions for borrowing for a period of one month and above.”

UAE banking liquidity remains comfortable, Bilandani said.

Qatar’s central bank has also taken action, offering borrowers payment deferrals, cutting reserve requirements and providing unlimited repo liquidity.

Gulf countries such as the UAE, Qatar and Saudi Arabia are bolstered by their large stockpiles of foreign reserves and their sovereign wealth funds, which are among the world’s biggest.

In a sign of the UAE’s resilience, several hedge funds giants have recently issued statements declaring their confidence in the country as a financial hub.