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With liquidity locking up and financial recruitment showing signs of cooling, the UAE government has been quick to ensure the trickle of pessimism in the markets doesn’t turn into a flood. It has implemented a series of measures designed to shore up confidence in the region’s banking sector.

President Shaikh Khalifa Bin Zayed Al Nahyan said yesterday that the government would guarantee all deposits and savings in national banks and ensure no UAE bank is exposed to credit risks and promised to pump as much liquidity into the market as is required.

It will also guarantee the deposits of international retail banks with a "significant presence" in the Middle East.

The move was welcomed by the business and banking community, after a torrid seven days. Ahmad Humaid Al Tayer, chairman of Emirates NBD, described it as “great news for the UAE economy and the banking sector”.

Shayne Nelson, Standard Chartered regional chief executive officer, MENA, said the move would lead to sustainability. He also said the bank is "in great shape and has no direct exposure to the kind of instruments that have led to the current financial turmoil."

The financial services sector in the UAE has largely been a hive of hiring activity over the last couple of years, as rapid expansion and a dearth of talent led to aggressive salary increases and a glut of poaching.

However, in the last six months, the talent pool has increased as Western bankers look for new opportunities in emerging markets, and the GCC is generally viewed as a haven for those on the receiving end of job cuts.

Last week, however, showed that the picture in the Gulf might not be so rosy after all, and recruiters suggested local banks had become more cautious in their hiring practices.

After a turbulent week on GCC stock markets, the government announcement spurred a recovery of around 6% of banking stocks on both the Dubai and Abu Dhabi bourses.

Another boost for the UAE banking sector came in the form of a research document by Global Insights, published yesterday. The document, which surveyed 33 emerging markets, rated the UAE sector among the most stable in the world, along with Saudi Arabia.