Banks need more liquidity support

The UAE's banking sector will need further liquidity support to boost lending to key economic sectors in the country, according to bankers and analysts.

"Direct fund injections by the government and support from the Central Bank have helped to ease the liquidity in the UAE banking system to a great extent. But even now many UAE banks have loan to deposit ratios in excess of 100 per cent. In the absence of deposit growth, only additional government deposits can fill this gap," said Philippe Dauba-Pantanacce, senior economist with Standard Chartered Bank, Middle East and North Africa.

A few bank chief executives who spoke to Gulf News agreed the big outflow of deposits from the banking system following the end of speculation on the dirham last year has not been fully bridged. However, all agree that government support has helped to improve the liquidity situation.