Mashreq meets UAE tougher lending rules timeline
Dubai, November 22, 2012
Dubai's second-biggest bank by stock market value Mashreq said it has met the tougher lending rules imposed by the central bank to tighten up the financial system after the Emirates debt crisis.
The new lending rules are part of a broader move to curb the vast debts taken on by government-owned businesses in the years before the property crash in 2009. The crisis was worsened by local banks' excessive exposure to government-related entities.
In April the UAE central bank had introduced caps for loans made to local governments and their entities and asked lenders to comply with the rules by the end of September.
"We are ok. We were able to abide by the timeline," Abdulaziz Al Ghurair, chief executive officer of Mashreq, told the Reuters Middle East Investment Summit. "Many banks don't like it but will have to adjust to it," he added.
Some of the UAE's largest commercial banks, such as National Bank of Abu Dhabi and Emirates NBD, are in talks with the central bank to extend the deadline, to avoid any damage caused by a quick sale of loans to meet the new rules.
The new rules cap lenders' exposure to government institutions in the seven-member UAE federation at 100 per cent of their capital, with a further restriction that they cannot lend more than 25 per cent of their capital to any state-related entity.
Lending throughout the UAE banking sector was flat at the end of August compared to the end of the second quarter, according to central bank figures. It has grown 1.8 per cent since the beginning of the year.
"We expect bank lending to continue to grow and fuel the economy. There is an appetite from banks to lend now more than before," said Al Ghurair, who is also governor of the Dubai International Financial Center.
"We have gone through a challenging period over the past four years. But we have trimmed and adjusted our system."
Mashreq, which is present in Egypt, Bahrain, Kuwait, Qatar, London, New York and Hong Kong, is looking for growth in fast-developing Middle Eastern markets to satisfy investor demand for diversification.
Media reports had suggested that Mashreq was interested to buy BNP Paribas' Egyptian retail arm. Al Ghurair declined to comment on the BNP sale but said that Egypt has great potential and the bank is still focused on the North African country.
"We're always keen and interested in Egypt, but there's nothing on the surface now," he added.-Reuters
More Finance & Capital Market Stories
- Bahrain firms plan IPOs
- Serbia wins $1bn Abu Dhabi loan
- Key equity banker resigns from Saudi Fransi
- DMCC to boost Islamic commodity trade with tie-ups
- IDB, KIA units to invest in Morocco
- First Gulf to set up $1bn sukuk in Malaysia
- Singapore’s UOB Bullion and Futures joins DGCX
- Infrastructure investment ‘key to growth’
- BKIC declares 30pc dividend
- StanChart profit falls 16pc in 2013
- Veteran Saudi banker to head AMF
- Dubai World prepays $284m to creditors
- EFG-Hermes sells Damas stake to Mannai
- Ultra rich number to grow 35pc in Mideast
- Saudi IPO market 'set for big year'
- RAK 'exploring' ceramics unit stake sale
- Bahrain Bourse wins key UK award
- Alba backs Euromoney forum
- URC bond rating upgraded to stable outlook
- GCC urged to set up onshore financial centres
- Consolidation push paying off for Bahrain banks
- Mubadala to focus more on US, Europe
- Six banks join plan for shared customer data register
- UAE economy grows 4pc in 2013
- Egypt foreign reserves up to $17.3bn
- StanChart opens second branch in Iraq
- Oil below $90 to hit GCC economies
- Payfort offers zero deposit scheme to SMEs
- In a first, NCB Capital names female CEO
- Du enters $1.17 billion financing deals