New UAE bank exposure rules scheduled to take effect in December
The head of UAE's banking industry association told reporters Monday that the country's banks will have approximately five years to "conform" to the central bank's newly proposed large-exposure rules, according to Reuters.
Imposing the new rules is designed to ensure that the UAE avoids future corporate debt crises similar to Dubai's most recent economic meltdown.
The central bank plans to restrict the ratio of exposure banks are permitted to hold based on the debt of government-related entities.
The proposed new rules are scheduled to be issued by the end of this year, according to Abdulaziz al-Ghurair, the chairman of the UAE Banks Federation.
The central bank has previously tried to introduce such rules in 2010, but such efforts ended in failure after banks countrywide issued complaints that their business growth could suffer as a result of the new rules, particularly if banks were forced to "unload" some of their state-linked loans in a short timeframe.
It is not yet clear if the new rules scheduled to take effect in December will diverge from the failed 2012 stipulations.
In related news, the central bank issued restrictions on mortgage loans last week in efforts to curb real estate speculation, but the caps are not "as stringent as initially planned" due to the banking industry's lobbying efforts.
- What's really holding Islamic Banking back?
- The rise of the Chinese renminbi: an unmatched opportunity for Qatar?
- Why, despite their emerging status upgrade, the UAE and Qatar still count as frontier markets
- How Egypt plans to deal with $20 billion worth of arbitration cases brought by foreign investors against it
- Business before wealth: what's really on the mind of the ME's high net worth business owners?