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UAE Advisory Body Approves Deposit Guarantee Law

ABU DHABI — A United Arab Emirates council that advises the government on legislation approved on Tuesday a bill that backs a government decree late in 2008 to guarantee bank deposits, the official WAM news agency reported.

“The bill provides a legal framework to guarantee deposits between banks covered in the guarantee and boosts confidence in the health of the financial situation in the country,” WAM said, citing a committee of the Federal National Council.

“It also reduces the traditional risks in the work of the banking system,” it said of the bill that expires in 2012. Bills proposed by the government need ratification by the head of state.

UAE Minister of State for Financial Affairs Obaid Al Tayer said in December the government would introduce legislation to back the deposit guarantee announced two months earlier.

The government had said in October it would guarantee bank deposits, including at foreign banks with core operations in the Gulf country, for three years to shore up confidence in the banking system as the global financial crisis started to hit.

“The goal is to protect the economic situation and the rights of the state and assure global financial institutions,” WAM reported on Tuesday, citing remarks by Al Tayer.

The FNC advises the government on legislation and questions cabinet ministers on issues in a parliament-like tradition in the UAE.

The UAE has offered over Dh120 billion dirhams worth of emergency facilities to banks to bolster the financial system and defrost credit markets since late last year.