UAE officials assure on banks, Dubai debt issues

UAE officials offered assurances that talks on a $24.8 billion Dubai debt deal were going well and that no more major corporate restructurings were expected after Dubai, helping to send financial shares higher.

Central Bank Governor Sultan Nasser al-Suweidi said the country's banks were healthy and well capitalised and that he saw no impact on the UAE economy from the Greek debt crisis.

European leaders and the IMF unveiled a $1 trillion emergency facility designed to cauterise the eurozone wound.

Finance ministry undersecretary Younis Al Khouri moved to soothe concerns about the state of the country's financial sector.

"All the banks are well capitalised," Khouri told journalists.

Markets welcomed a weekend Greek rescue plan and the official UAE reassurances, helping to send Dubai's index up 1 per cent to its first gain for four sessions, in line with a rally in global stocks.

Abu Dhabi banks led the UAE capital's index up 0.8 per cent, with National Bank of Abu Dhabi - the country's largest lender by market capitalisation - rising 4.6 per cent and rival Abu Dhabi Commercial Bank adding 4.5 per cent.

"Short-term, (the package) is a shot in the arm for sentiment in European and global markets - they priced in concerns (about a European debt crisis), so it's only logical to price in improved sentiment," said Ali Khan, managing director and head of brokerage at Arqaam Capital.  Suweidi said the UAE central bank does not expect to see more large-scale corporate restructuring similar to Dubai's debt woes.

Asked whether there would be any further large scale corporate restructuring in the UAE, Suweidi said: "No, these are the largest."

 
DEBT LAW

In addition, Suweidi said Greece's debt woes will not affect the UAE.

"There's no link between Greece and the GCC countries. Greece is on the one continent and the GCC is on another continent. There is no link in terms of financial flows, no strong links, nor strong economic relations," he said.

Separately, the UAE confirmed plans to issue a comprehensive law governing the issuance of public debt and establish a debt management office this year, before considering any issues of sovereign bonds, the minister of state for finance said.

"The first thing is that the law of public debt needs to be issued...after that we will consider the matter of issuing bonds," said Obaid Humaid Al Tayer, minister of state for finance said. "The law will be passed this year."

Al Tayer said after a law is passed, a debt management office will also be set up during the year. Any sovereign issues will take place after completion of law and the setting up of office, he added.