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Banking Deposits guarantee effective for 3 yrs: Federal Cabinet

ABU DHABI - The decision taken by the federal cabinet to guarantee bank deposits will be effective for three years. The Emirates News Agency (WAM) quoting a source in the Ministry of Finance, stated that the guarantee on deposits will also include foreign banks which have significant operations in the UAE.

The ministry did not define the banks which will qualify but a banking source said the decision covers 'international global banks that have retail branches in the UAE.'

Regional banks, including Iranian businesses, will be excluded from the guarantee, the source said.

The guarantees will cover all existing accounts of nationals and foreign residents but not new ones, to prevent an inflow of money from other countries, sources familiar with the decision told AFP.

The government of theUAE announced on Sunday that it will guarantee deposits and savings in local banks to protect depositors in face of the global financial turmoil.

It said it will also ensure that no local bank is exposed to credit risks and will guarantee inter-bank lending among all banks operating in the Gulf country.

A number of international banks, including HSBC, Standard Chartered, Citibank and BNP Paribas are among some 45 commercial banks operating in the UAE.

Foreign residents comprise 80 percent of the Emirates' population.

The government's bid to shield the country's booming economy from the global financial meltdown and lift investor confidence had an immediate effect on the UAE's two stock markets. Both the Dubai and Abu Dhabi bourses soared on Monday, spurred by the real estate and banking sectors.

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