The Ministry of Finance will inject a further Dh25 billion (US$6.8bn) into the local banking system next week.
Finance Ministry to inject Dh25bn into banks
The Ministry of Finance will inject a further Dh25 billion (US$6.8bn) into the local banking system next week, in the second instalment of a total Dh70bn package promised to banks, it announced earlier today. The ministry began distributing the first instalment of Dh25bn on Oct 23. The extra funds would make it easier for banks to extend loans to large companies that needed to make payments on existing debt or fund their operations in the coming months, analysts said. Companies have faced concern they would be unable to borrow enough from international lenders to repay debts and finance crucial infrastructure projects due to the global credit shortage.
The conditions of the second injection will be similar to those of the first, according to a release from the Ministry of Finance and published on the WAM nes agency. As of Wednesday, several banks said they had received portions of the government's first instalment, including Emirates NBD, National Bank of Abu Dhabi, and Abu Dhabi Commercial Bank. The banking sector had received 80 per cent of the first government instalment on Wednesday, according to Al Khaleej newspaper.
The Ministry of Finance said it would monitor banks to ensure they used the funds to finance trade, and the completion of projects already under construction, rather than on "speculative" activities. "Banks which do not abide by the conditions of providing their financial statements as determined by the Ministerial Committee and the Central Bank, would not be eligible to receive payment," the press release said.