The Central Bank is mulling over measures to limit the impact of Dubai World's multi-billion debt crisis on banking system, a media reported.
Quoting an adviser to the government, the National said, "The Central Bank is considering measures to limit the risk of systemic damage to the banking system."
The apex bank is expected to announce the measures tomorrow, the daily added.
Lenders in Abu Dhabi and Dubai hold billions of dollars of Dubai World debt and the company’s decision to ask for a payment holiday could hurt bank shares when trading resumes tomorrow, the report said.
The newspaper further said that members of the Dubai government met Central Bank officials in Abu Dhabi yesterday.
The Central Bank is keen to avoid banks taking provisions for bad loans to Dubai World. It also wants to avoid further downgrades of credit ratings of the banks.
Meanwhile, advisers to Dubai World are also working on a plan to enable the troubled conglomerate to meet a crucial deadline for repayment of the $4 billion that its subsidiary Nakheel is due to pay back in just over two weeks.
"If Dubai World were able to make that payment, it would create breathing space to deal with the rest of its liabilities – which currently add up to $59 billion – and reassure world markets about Dubai’s financial condition," the report added.
