UAE cbank extends lending cap by six months
Abu Dhabi, October 9, 2012
National Bank of Abu Dhabi (NBAD) said the UAE central bank had extended its deadline to comply with limits on commercial banks' lending to state-linked companies by six months.
The central bank unveiled the rules in April, introducing caps for loans made to local governments and their entities. Lenders had until September 30 this year to comply with the rules.
"The (central bank) governor announced it was extended for six months at the last central bank meeting (with commercial banks in September)," Abdulla Saleh Abdulraheem, NBAD's deputy chief executive, told Reuters on Tuesday.
"It's a good step, it gives the banks time."
Central bank officials were not immediately available for comment.
Under the rules, any bank's lending to the governments of the seven-member UAE federation and their quasi-sovereign entities is capped at 100 percent of its capital base; its lending to a single borrower is limited to 25 percent of capital. Previously there was no such limit.
Some of the UAE's largest commercial banks were believed to remain well over the limit on September 30, and they asked the central bank for extensions.
Michael Tomalin, chief executive of NBAD, told reporters at a conference in Kuala Lumpur: "The central bank has extended the lending limit to March next year, and during that time we will be talking to the central bank on ways which we hope we can accomodate ourselves into their strategy.
"We support their direction of travel...We believe with some definitional changes we can accomodate the strategy, and it will not affect our growth in the future."
Asked if NBAD would need to sell assets, he said: "Why would you want to sell AA-rated bonds to buy lesser value bonds for their liquidity portfolio? Our interpretation of the circular is that no asset sale is required." - Reuters
More Finance & Capital Market Stories
- Gulf stocks surge as Fed tapering adds fuel to fire
- SABB launches graduates programme
- NBAD names key official for Hong Kong
- Commercial Bank of Dubai obtains $450m loan
- EFG Hermes names group co-chief
- Islamic bond issuance in GCC picking up
- Kuwait budget surplus likely to hit $42.4bn
- Bahrain banking sector on road to recovery
- GCC banks' outlook stable, says report
- GBSA panel names new chairperson