Pick ‘n mix bailout

29 November 2009 By Una Galani Follow @ugalani

The rich emirate seems about to support its struggling neighbour Dubai but only on a casebycase basis. Abu Dhabi s priority should be to stop a bank run. And although it may also make sense to cherrypick some Dubai assets, that doesn t mean bailing out Dubai World.

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The central bank of the United Arab Emirates on Sunday set up a special liquidity facility and said that it stood behind local and foreign banks operating in the country, according to Reuters. It's unclear if the central bank is preparing to issue a further statement before markets reopen on Monday after a fourday religious holiday.

Members of the Dubai government reportedly met with central bank officials in Abu Dhabi on Saturday to discuss potential measures to limit the fallout from Dubai World's decision to restructure.

Meanwhile, an unnamed official in the government of Abu Dhabi told Reuters on Saturday that Abu Dhabi will look at Dubai's commitments and approach them on a casebycase basis. It does not mean that Abu Dhabi will underwrite all of their debts..... Some of Dubai's entities are commercial, semigovernment ones. Abu Dhabi will pick and choose where to assist.

On November 25, the emirate's wholly governmentowned holding company said that it would ask creditors for a standstill until May 2010. Dubai World has liabilities of $59 billion at the end of December 2008.

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