UAE banks need to raise deposit levels to reduce interbank lending rates and put them more in line with London Interbank Offered Rates (Libor), the central bank governor was quoted as saying on Thursday.

UAE interbank rates (EBOR) have stayed high over past months, sparking criticism from the central bank, although debt restructuring and a flood of dollar liquidity on global markets have helped to ease some of the pressure.

'The gap between the two prices (of EBOR and Libor) must be bridged,' Sultan Nasser al-Suweidi told local daily al-Ittihad.

Deposits should rise by Dh40 billion ($11 billion) in order to achieve this, he said, which would also help to narrow the loans-to-deposit ratio in the Gulf state.

'This is not a big amount in comparison to the more than Dh1 trillion worth of deposits in the banking sector in the UAE,' he said.-Reuters