UAE to inject $19 billion into bank deposits: paper

DUBAI (Reuters) - The United Arab Emirates will inject 70 billion dirhams ($19.06 billion) into long-term bank deposits under a government plan announced this month to address a liquidity shortage, a newspaper reported on Sunday.

The UAE last week ordered funds to be transferred to the finance ministry and used to help lenders stave off the effects of the global credit crisis, but it gave no details on how this would happen.

"These facilities would be directed to banks as long-term deposits to enhance liquidity, which would help banks expand lending activities to the (level) they were at about three months ago," Arabic-language daily al-Ittihad quoted a well-informed source as saying.

Officials of the Ministry of Finance and UAE central bank met on Saturday to discuss the mechanism for injecting the funds, it added. Central bank officials contacted by Reuters declined to immediately comment on the report.

Global credit markets have dried up as the West faces its biggest financial crisis since the 1930s Great Depression.

State and private investors in the Gulf Arab region, booming thanks to six years of high oil prices, have been funneling billions of dollars into infrastructure projects which demand massive amounts of continuous credit.

The UAE central bank last month opened a 50 billion dirham emergency facility, with the funds offered at a premium to market rates. UAE interbank interest rates have edged lower since the facilities were announced.

Central banks in the UAE and Saudi Arabia have also guaranteed bank deposits, while Kuwait's central bank reduced its benchmark discount rate, to boost confidence in banks.

(Reporting by Inal Ersan; Writing by Daliah Merzaban; Editing by Tomasz Janowski)