DUBAI, July 6: Abu Dhabi may face huge costs to save its reputation and prevent deposl tor panic following the shutdown of Bank of Credit and Commerce International SA(BCCI) amid allegations of global fraud. Gulf bankers say. reports Reuter.

Luxembourg-based BCCI. which controls about 20 billion dollars worldwide, is 77 per cent owned by Abu Dhabi interests, mainly by the family of Abu Dhabi ruler and President of the United Arab Emirates (UAE) Sheikh Zaid Bin Sultan Al-Nahayan.

The Bank of England led a coordinated strike by world financial authorities on Friday to freeze the assets of BCCI and Bank of Credit and Commerce Overseas.

Gulf Bankers saw little im-pact on other regional banks but said BCCI's large UAE presence through Bank of Commerce and Credit Emirates (BCCE) threatened to undermine local banking confidence and spark a run on the subsidiary's deposits unless the authorities clearly stated they would back the bank.

"We’ve got a serious situation developing here where clarification by the Central Bank and the Government Is required", said the General Manager of another UAE Bank.

"Are they going to protect UAE depositors or not? The public needs to know.

said Sheikh Zaid left to spend a few days in Europe on Saturday but did not say where

OneKL-mbcc.^ holding an emergency meeting BCCE sources said most of the top management were in

Bank of England Governor Robin Leigh - Pemberton said the fraud arose from attempts by senior executives to conceal losses from BCCI's lending and treasury operations.

Pierre Jaans. Director of Luxembourg's Monetary Institute, said BCCI posted a huge operating loss "last year which had not been made public. By next week, it would not have had a future either in Luxembourg or Britain, he told reporters. BCCrholdmgs control a maze of banks stretching from London to New York, Nigeria, and Panama

In January 1990. four BCCI

officials were found guilty in the United States of laundering drug money for former Panamanian leader Manuel Noriega.

Last year, the Abu Dhabi shareholders bailed out BCCI from losses of up to one billion dollars, bankers said.

The bank s 1989 financial report said the shareholders also committed themselves to maintaining its capital base, which means funding any further losses.

Abu Dhabi has used Ils banking flagship to handle large amounts of the Emirate's oil earnings.

The UAE central bank said on Friday it saw no irregularities tn BCCE operations, but stopped short of saying it would back the bank, and did not say whether it had officially told BCCI to close.

BCCI's eight branches

around the UAE were closed on Saturday but the 17 BCCE branches were open

BCCI Bahrain said It would not operate after the Muslim weekend. BNCC1 in Oman was not immediately contactable.

The speed of the BOE action appeared to have taken the BCCI management by surprise. BCCI Lebanon Manager Asa'ad Abi Raji said he was op erating but added: "I am trying to contact our head office in Abu Dhabi to find out what is happening.

In Amman, a senior Government official said the Bank’s three Jordan branches, which have deposits of up to 130 million dollars, had been shut for three'days and their assets frozen.

An estimated 10 per cent holding in BCCI by the Abu Dhabi Investment Authority (ADIA) could cause difficulties with other Arab banks but Gulf bankers expected no major impact on regional financial markets outside the UAE.

ADIA holds shares in several Arab Institutions, including the two big Bahrain based International banks Gulf International Bank and Arab Banking Corporation.

BCCE has no financial problem and it will continue to serve Its valued depositors, customers, and clients, said BCCE Chairman Sheikh Nahayan Bln Mubarak al-Nahayan, who Is Sheikh Zaid's cousin.

A senior source at the bank said there had been no run on the bank's 5.09 billion dirhams (1.3 billion dollars) of customer deposits. We have been surprised, he said.

In the UAE share market, some BCCE stock holders wanting to get out could find no buyers, brokers said.

BCCI owns 40 per cent of BCCE, which has around one billion dirhams (272 million dollars) of its depositors money banked with BCCI. UAE bankers said.