Proactive policies by the regulator helped the recovery: Abdul Aziz Al Ghurair

The UAE’s banking sector, which suffered in the aftermath of the global financial crisis with some of the major banks reporting high non-performing loans between 2009 and 2011, have “recovered quickly” to become robust, according to Abdul Aziz Al Ghurair, Chairman of Dubai International Financial Centre Authority and Chairman of Emirates Banks Association.

He credited the UAE Central Bank and the Federal Government’s Ministry of Finance proactive steps for the fast recovery of the banking sector during his address to the assembled global delegates at SIBOS 2013 yesterday.

The Ministry of Finance had disbursed $19 billion as subordinated deposit to the UAE banks which provided the liquidity to the capital and boosted capital adequacy ratio by 5 per cent, which has now gone up to 20 per cent. The UAE Central Bank’s additional facility of $14 billion was made available to banks, which they sparingly used.

As a result of these actions and a very proactive regulator, the UAE has a robust banking sector, he added. The UAE’s banking sector is the largest in the Arab world, with its assets standing at 1.3 times its GDP (gross domestic product).

“The Central Bank always maintained high standards for capitalization of the UAE banking system, and has encouraged the banks to maintain higher then minimum required capital.”

The minimum regulatory Tier I capital requirement is 12 per cent for UAE banks. However, he pointed out that in 2012 the average Tier 1 capital was 17.6 per cent.

Making a case for Dubai’s success as a global hub for trade and finance, that amid some of the conflict-ridden countries of the Middle East, the Gulf has a whole has demonstrated growth and endurance for reasons of good governance, political stability and pragmatic economic policies pursued by the leadership.

He highlighted the fact that with a gross domestic product GDP of $1.56 trillion (Dh5.73 trillion), the GCC is the 12th largest economy in the world. GCC exports have doubled since 2009 to reach $1 trillion and by 2020, the region is expected to be a $2 trillion economy.

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