The Central Bank is preparing to overhaul banking laws dating back to the charter under which it was established, it revealed as it announced a slight dip in its earnings for last year.
The Central Bank also said it was discussing with the Ministry of Finance "major amendments" to banking laws, now in draft stage. It signalled changes to the 1980 law under which it was established while also discussing laws on the monetary system and the organisation of banking. The Central Bank and the Ministry of Finance also discussed a draft law on the organisation of the financial-services sector.
"The board stressed that these laws should reflect the independence of the Central Bank and the independence of monetary policy, as per the international standards issued by the Financial Stability Board and the standards of Basel Committee," the Central Bank said in a statement that did not give details of proposed changes.
The banking law updates being considered come amid new rules meant to tighten up on lending practices common before the global financial crisis began in 2008. This month, the Central Bank limited the amount that banks can lend to individual companies, after guidance from the IMF that the UAE should aim to shield its banks from excessive lending to government-related holding companies.
New laws on retail banking are expected to be issued within the next two months as part of what is being billed as an annual review of consumer finance regulations implemented last May. The Central Bank reported net income of Dh3.7 billion (US$1bn) for last year, 0.5 per cent less than the Dh3.72bn made in 2010. It did not disclose how it generated its earnings last year.
The Central Bank transferred Dh2.03bn of its profit to fund the Ministry of Finance, while Dh925m of the bank's profit was added to the federal Government's deposit at the Central Bank.
A further Dh740m was transferred to the Sheikh Zayed Housing Programme, which provides low-cost housing loans for Emiratis. All of the transfers require the approval of the State Audit Institution.
At the end of last year, the Central Bank held Dh171.03bn of investments, which in the past have accounted for most of its income. Its investments include highly rated securities, government bonds and treasury bills. Such investments decreased by 2.3 per cent during the year. The Central Bank disclosed more details on its financial assets as a result of sovereign-debt crises in the United States and Europe.
Copyright © International Media Investments FZ LLC. All rights reserved