Analysts at Jefferies Group say liquidity conditions in the banking sector are sound.

(The UAE Central Bank in Dubai))

Jefferies: UAE Central Bank Injects AED 30 Billion to Support Banking Liquidity

Analysts at Jefferies Group estimated that the UAE Central Bank injected more than AED 30 billion, equivalent to approximately $8.2 billion, into the banking system in a move aimed at mitigating the impact of the war with Iran and bolstering liquidity stability.

Jefferies explained that data from the UAE Central Bank showed commercial banks utilizing a tool known as the Emergency Liquidity Insurance Facility (CLIF). Launched in 2022, CLIF allows banks to draw on the central bank's reserves against various types of collateral, with borrowing periods extending to one month or more.

The UAE Central Bank had previously launched a support package in March aimed at enhancing liquidity and lending capacity within the financial system. According to Jefferies, liquidity conditions in the UAE banking sector remain sound despite pressures related to regional tensions.

The Governor of the Central Bank of the UAE, Khalid Mohammed Al Balama, affirmed that the UAE banking sector possesses the resilience, flexibility, and strength to effectively navigate current regional changes, noting that financial indicators reflect a high level of stability and preparedness.

The Governor stated that the UAE banking and financial sector enjoys a strong and stable position, enabling it to keep pace with regional developments and efficiently address any potential challenges.

He explained that the capital adequacy ratio in UAE banks currently stands at approximately 17%, exceeding regulatory requirements, while the liquidity coverage ratio surpasses 146.6%, reflecting the robust financial positions of banks and their ability to withstand potential pressures.