Deposit safety net extends to foreign banks

H Michael Jalili

• Last Updated: October 13. 2008 5:17PM UAE / October 13. 2008 1:17PM GMT

The Government has extended a guarantee of bank deposits to those held at foreign banks with “significant operations in the UAE” and specified that the guarantee on all banks will be limited to three years, according to WAM, the state-run news agency.

The move follows yesterday’s announcement that the government will guarantee deposits at national banks. Foreign banks contacted yesterday expressed concern that since they were not included in the government’s initial guarantee their depositors might flee to domestic banks, leaving them at a competitive disadvantage.

The actions come as global leaders attempt to fashion a response to the worst financial crisis since the great depression early last century. Other governments from Germany to Australia have taken similar steps to protect banks and customer deposits in recent days.

Foreign banks, which are limited to eight branches, have more than 140 branches across the country. It remained unclear precisely which foreign banks would qualify for the guarantee program under the government’s definition of “significant operations” in the country.

mjalili@thenational.ae