Saudi Arabia, UAE foresee little Brexit impact on their banks


Statements came as global stock markets lost about $2 trillion in value on Friday after Britain voted to leave EU

Towers under construction at King Abdullah Financial District in Saudi capital Riyadh earlier this year (AFP)
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Sunday 26 June 2016 8:34 UTC

Financial authorities in Saudi Arabia and the United Arab Emirates on Saturday downplayed the impact of Britain's vote to leave the EU on their banks.

Authorities in both countries, whose currencies are pegged to the US dollar, said they were keeping an eye on the impact of the Brexit vote, but that their banks' exposure is limited.

"Due to the limited connection between the UAE financial system and that of the UK, the channels through which financial institutions in the UAE could be affected by the state of uncertainty over relations between the UK and the EU are limited," said the UAE's central bank.

The statements came as global stock markets lost about $2 trillion in value on Friday after Britain voted to leave the EU, while the pound sterling suffered a record one-day plunge to a 31-year low and money poured into safe-haven gold and government bonds.

In a statement carried by the UAE's official WAM news agency, the central bank said it will "continue to watch developments ... mainly those that could affect the UAE economy".

The governor of the Saudi Arabian Monetary Agency, Ahmed al-Kholifey, said the OPEC kingpin had already "revised its investment policy regarding assets denominated in euro and sterling pounds" ahead of Thursday's historic vote.

"It is early to assess the impact of the UK exit from the EU ... but we expect the impact on the banking sector to be minimal due to its limited exposure to those two currencies," he said, quoted by the official Saudi Press Agency.

Saudi Arabia’s foreign assets are mainly denominated in US dollars, in the form of securities such as US Treasury bonds and deposits with banks abroad, Reuters news agency reported.