18.6% solvency UAE banks by the end of SeptemberTruth Consultancy
Before 27 months from full implementation
Abu Dhabi – Mohammed Abdel-Hay
Date:13 November 2016
UAE banks outperformed the requirements of «Basel 3» before 27 months from the full application at the level of the world’s banks by 2.8%.
Report monetary and banking developments and capital markets for the third quarter of this year, issued by the UAE Central Bank late last week revealed that the total capital and reserves of banks rose to 339.4 billion dirhams at the end of September 2016, as the banks’ assets rose to 2550.1 billion dirhams to reach the solvency of banks relative to 18.6 % while the Basel identified requirements for banks in the world ratio of 10.5% for fiscal solvency by 2019.
The bankers and experts for «economic statement» outweigh the financial solvency of the UAE banks on the requirements of «Basel 3» clearly reflects the strength of the banking system as the best in terms of solvency in the region. They stressed that the banking sector does not need government support, as happened after the global financial crisis that hit the world in late 2008, asserting that the banks have succeeded in fully rely on themselves, and gained considerable experience over the years positioned to increase its financial solvency and to strengthen and consolidate its position be acting as a pioneer in the region in the past next.
And it confirms the satisfaction Reda Mosallam economist and partner at Truth Corporation for Economic Consultancy in Abu Dhabi that the company is in the process of completion of a comprehensive study on the financial solvency of the UAE banks in the coming weeks, adding that initial indications of the study confirm that the UAE banks are the best in the solvency of banks in the region.
He notes that the UAE banks completed early Basel requirements, pointing out that these requirements are specified percentage of 10.5% for banks around the world to prevent the recurrence of major international banks collapses crisis of late 2008 and especially Lehman Brothers, was formerly the Basel 1 and 2 requirements determine the solvency by about 6% of them 2% capital and reserves of the bank and 4% hedge reserves brought by Basel 3 to 10.5% of the 8% capital and reserves of the bank and 2.5% reserves hedge, has the UAE banks exceeded the Basel requirements 3 early, and an increase of up to 2.8% by the end of September, without doubt the banks will increase this figure prior to the full implementation of the requirements of «Basel 3» the beginning of 2019, knowing that he was determined these requirements in 2010 in the wake of the global financial crisis has been awarded eight-year deadline for banks in the world to adjust their finances and avoid any risks.
It draws satisfaction ٌReda Mosallam that the banking sector form the main lifeline for projects of economic and social development in the UAE, pointing out that big a confidence of depositors led to the increase in deposits from customers excellent rates, and increased loans granted to individuals and economic sectors, and contributed to the prosperity of the business sector in the state and increase the total output, also achieved very impressive results, especially in net profit and improved asset quality.
Amjad Nasr financial expert believes that the UAE banks are not in a difficult situation or under pressure to apply the requirements of «Basel 3» like the majority of the region’s banks, without a doubt, both conventional and Islamic banks in the UAE increased its capital by issuing instruments and bonds to strengthen their capital, and no doubt the banks benefited greatly from fallout the global financial crisis accelerated in the application of the requirements of «Basel 3» so as not to be affected by its operations and financing policies and succeeded in doing so in a very early and no doubt the success of the banks because of the strong partnership and close cooperation between the UAE Central Bank and the banks over the past years.
Amjad Nasr said that banks today are not in need of government support, as happened after 2008, both from the federal government or local governments, and undoubtedly, the banks today have a liquidity are classified as very good, a great experience and systems work very sophisticated management, and today it provides loans to its customers, and benefited greatly from the global financial crisis. The attention of the financial expert to note worthy importance over the past years is the rapid increase in the banks’ assets as well as foreign central bank assets, which confirms the strength of the banking sector in the country in general, but do not force the central bank and control the strict and permanent communication with banks achieved this accomplishment.
Liquidity very well available in the banking sector or the market in general, according to official data currently in the banking sector continues its activities to attract more deposits of its clients through a sophisticated and flexible methods and good prices benefit.