UAE delays planned $5.5 bln cash injection

The United Arab Emirates has delayed the final 20 billion dirham ($5.45 bn) tranche of a liquidity injection plan as banks do not currently need it, a newspaper reported on Thursday, citing unidentified sources. Last year, the UAE finance ministry poured $6.8 bn into bank deposits, the first tranche of a $19.1 bn rescue facility it set up to help the Gulf Arab state's lenders weather the onslaught of the global credit crisis.

It deposited another $6.8 bnn into banks in November, but has not made any statements since regarding the remainder of those funds. This came after the central bank set up a $13.6 bn emergency bank lending facility to combat the crisis.

The implementation of the third tranche was subject to conditions set out by a ministerial committee including the UAE's finance and economy ministers, as well as the central bank governor, the daily al-Bayan reported, citing "senior banking and financial sources".

At its last meeting this committee reviewed the liquidity situation in the banking sector as well as other banking indicators for the month of August, and concluded there had been a noticeable improvement over the last few months, the sources told the paper.

At its next meeting the committee would look at September indicators, al-Bayan reported.

The strongest indicator of an improvement in liquidity in the banking sector was an increase in the certificates of deposit issued by the central bank, the sources said.

Earlier this week, Shayne Nelson, Middle East's chief executive at Standard Chartered, said UAE banks are facing a liquidity shortfall of up to $11 bn.