ABU DHABI, May 5 -- Deposits of foreign banks in the United Arab Emirates (UAE) plunged at the end of 2009 to their lowest level in nearly four years, a Dubai-based business daily reported Wednesday.
Foreign banks pulled 112.5 billion dirhams (about 30.6 billion U.S. dollars) out of the UAE's banking system in 2008 and 2009, including almost 13 billion dirhams (about 3.5 billion dollars) in last December alone, Emirates Business 24/7 said, citing figures published by the Gulf nation's central bank.
The massive withdrawal indicated an end to foreign money inflow that had peaked before the eruption of the global financial crisis in 2008, the paper said.
According to the report, from about 205.58 billion dirhams ( about 56.1 billion dollars) at the end of 2007, foreign banks' deposits with the UAE's 24 national banks and 28 foreign units stumbled to about 93.15 billion dirhams (about 25.4 billion dollars) at the end of 2009, the largest yearly decline in those deposits.
The deposits hit an all-time high of about 211 billion dirhams (about 57.6 billion dollars) in April 2008 at the height of speculation that the UAE and other Gulf oil producers would appreciate their currencies against the dollar, the report said.
Foreign deposits began to recede after the UAE central bank repeatedly ruled out such plans and came almost to a standstill last year after the country decided to withdraw from the monetary union set up by Saudi Arabia, Kuwait, Qatar and Bahrain. Oman, another member of the Gulf Cooperation Council (GCC), also pulled out in late 2007, the report said.
The drive by foreign depositors to pull their funds out of the UAE and other Gulf nations gained momentum after the eruption of the financial crisis, as foreign banks also struggled to meet commitments and bridge a liquidity gap at home, it said.
The report added that the plunge in foreign banks' deposits last year pushed them to their lowest level since mid-2006, when they stood at about 75 billion dirhams (about 20.5 billion dollars) .
Analysts estimated that more than 110 billion dirhams (about 30 billion dollars) in foreign bank deposits has left the UAE since the eruption of the financial crisis, according to the paper.
The decline in foreign deposits also dragged UAE banks' overall foreign liabilities from 320.9 billion dirhams (about 87.6 billion dollars) in 2007 to 282.5 billion dirhams (about 77.1 billion dollars) in 2008 and about 251 billion dirhams (about 68.5 billion dollars) last year, the report said. |
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