Economy

U.A.E. 'Stands Behind' Banks

In the face of crippling debts, the United Arab Emirates' central bank has said that it “stands behind” the nation’s banks as they attempt to stem an onslaught of loan losses. The downturn came after Dubai World, a holding company with $59 billion in debt, announced that it would seek a standstill agreement and to extend its loan maturities. Many of Dubai’s state-owned companies borrowed a total of $80 billion to build the state economy, but as a result of the global credit crisis have since struggled to raise loans, and sought help from Abu Dhabi, the U.A.E. capital. “This is a very reassuring move by the central bank to limit the risk of any run on Dubai-based banks,” said the chief economist at Banque Saudi Fransi in Riyadh, adding that it would lessen “liquidity concerns by foreign banks about the banking system, mostly those based in Dubai.” The banking industry in the United Arab Emirates is the biggest among six Gulf Arab states, and Abu Dhabi holds 8 percent of global oil reserves.