UAE banks can absorb any shock: official

Banks in the UAE are strong enough to absorb any shock, including the impact of Dubai World's debt restructuring, the director-general of the Finance Ministry said yesterday.

"The committee, which is headed by our minister, made sure that UAE banks have enough capital to absorb any shock that might come," said Younis Al Khouri. The UAE will also not see a federal bond issue in 2010. "We may not be able to go to the market in 2010. We are still in the process of setting up the debt management office," he added.

Al Khouri said the government did not see the need for a capital injection for banks at this time. "The ministerial committee is meeting every month and reviewing the end results of local banks. So far they have not seen a need for further injection," he said.

He said the country has Dh20 billion left out of a Dh70bn facility set up in 2008 to inject liquidity into the UAE banking system. "Twenty [billion dirhams] is still with us. Twenty from the 70 [billion dirhams]," said Al Khouri.

Also yesterday, the Finance Ministry released a statement saying achieving a balanced budget in the 2011 to 2013 period would be its top priority.