It is an understatement to say that the UAE banks are feeling the pinch at the start of 2016.

The country’s central bank has ramped up pressure, asking lenders to maintain permissible limits in various ratios such as eligible liquid asset ratio, the advances to stable resources ratio and loan to deposit ratio – indicators of a bank’s financial health.

The pressure from the central bank couldn’t have come at a worse time. Liquidity conditions are getting tighter in the UAE. The price of crude, – sale of which is the major source of income for the oil-exporting UAE, especially, Abu Dhabi – have dropped to 11-year low in recent weeks. Proceeds from oil have been the most stable deposit base for the banks but it is quickly depleting as the government has been withdrawing funds in order to meet the shortfalls.

National Bank of Abu Dhabi (NBAD), the largest bank in the UAE by assets, was among the worst hit. The government deposits at the lender dropped by $13bn. NBAD’s chief executive Alex Thursby in October said that the UAE banking system as a whole has lost about $15bn in government deposits from September 2014 to September 2015. Outflow of government funds in the last quarter of 2015 is not known.

For banks, the only other way to replace lost funds was to look for corporate deposits – even the short term ones– to meet the central bank’s liquidity and deposits requirements.

The race for deposits was on in the last six to eight weeks of 2015. First Gulf Bank (FGB) secured a $1bn deposit from Emirates Airlines. United Arab Bank, Commercial Bank International and Emirates Islamic also joined the fray, actively seeking to boost their deposit base. NBAD chose not to be part of the expensive hunt in the local market and focused on international market to secure deposits.

With oil prices showing no signs of reversal in the short term, it is unlikely banks will see the lost government funds coming back anytime soon to prop up their balance sheets. The race will still be intense in 2016 but the focus is more likely to be on more stable and longer term corporate deposits.