INSTANT VIEW: Dubai cbank to provide liquidity to banks

DUBAI (Reuters) - The United Arab Emirates' central bank said on Sunday it would provide additional financing for commercial banks and that it stood behind the Gulf Arab country's banking system and branches of foreign banks.

ANALYSTS' COMMENTS ON DUBAI CENTRAL BANK SUPPORT MOVE:

RAJ MADHA, BANKING ANALYST, EFG-HERMES

"A new facility is a good thing given the current situation but we do expect a more comprehensive statement outlining how they will stand behind the banking sector and making sure that the impact on the banking sector is relatively restricted."

"This is the absolute minimum they could have done and suggests they won't be making another announcement before tomorrow morning, which is a little disappointing."

SHAWKUT RASLAN, HEAD OF BROKERAGE, PRIME EMIRATES

"I think the central bank is trying to lessen the impact of this news (the Dubai debt problems). It might support the market a little bit but I don't think it is enough."

"I think some foreigners will take their money of the country and others will be afraid to put their money into these markets."

GHANEM NUSEIBEH, SENIOR ANALYST, POLITICAL CAPITAL

"The statement is expected. I don't think it will alleviate the concerns related to Dubai's problems. It would have been surprising not to see this statement today.

"It (the facility) would cover the immediate concerns related to deposits in the UAE banks. It doesn't mean that lending would necessarily ease. It is no guarantee for depositors."

"We still don't know the extent of the UAE banks' exposure to Dubai's problems. An important announcement (from the central bank) is to say what banks are exposed to Dubai's problems and how much is their exposure in numbers.

MOHAMMED YASIN, CHIEF EXECUTIVE OF SHUAA SECURITIES

"What the central bank is doing here is pre-empting some of the worries that some of the foreign institutions, like what happened a year ago ... may try to transfer cash out."

"I would think foreign institutions will be the initial source of worry ... so the central bank is trying to first of all give those people the piece of mind that they are on top of things and secondly, to give the very strong message that the funds are there, and they are going to support the banks."

"(The facility is) likely to be substantial, as it is really making money available. Current account means it is available for withdrawal immediately."

"The fear is (banks) will be downgraded, those are side-effects you have to be ready for, so the central bank is trying to pre-empt the system, strengthen it against any possible nervous reaction."

MOHIEDDINE KRONFOL, MANAGING DIRECTOR AT ALGEBRA CAPITAL

"Regardless of what comes of the restructuring of Dubai World, the central bank has to be concerned first and foremost with the integrity of the banking system so it has to make sure the fallout from the restructuring does not impair the banking system, prevents any flight of capital and limits the amount of provisions banks operating in the UAE need to book if they have to. It's a preventive measure."

SHAHID HAMEED, GLOBAL INVESTMENT HOUSE, HEAD OF ASSET MANAGEMENT FOR GULF REGION

"Something like this is very much needed. We were expecting for the central bank to release a statement before markets open up tomorrow. This should be a positive."

ABDUL KADIR HUSSAIN, CEO, MASHREQ CAPITAL

"The central bank is making sure there are no systemic issues and is standing behind the banks ... Dubai World was not mentioned, but it's a step in the right direction."

JOHN SFAKIANAKIS, CHIEF ECONOMIST AT BANQUE SAUDI FRANSI-CREDIT AGRICOLE GROUP

"It's important because the main concern is that there might be some panic behavior by depositors in Dubai and by bankers who want to take deposits out of the banking system."

"This will support the liquidity and the overall soundness of the banking system in the UAE and especially in Dubai."

"You might have depositors who might panic and you might have a run on the Dubai-based banks."

"The central bank is sending a strong message to everyone that they are providing ample liquidity and the guarantee to banks in the UAE."

"The stock market in Dubai is very likely going to take a limit-down hit."

AYMAN EL SAHEB, DIRECTOR OF OPERATIONS, DARAHEM FINANCIAL BROKERAGE

"It's good to know that they are still willing to help. Support of any kind is welcome at this point."

(Compiled by Eric Auchard; Editing by Mike Nesbit)