The UAE’s Central Bank (CBUAE) approved, on Tuesday, a wide-ranging financial resilience package aimed at strengthening the banking sector and supporting the wider economy amid global and regional uncertainty.
The package, endorsed during a board meeting chaired by Sheikh Mansour bin Zayed Al Nahyan, Vice President, Deputy Prime Minister, Chairman of the Presidential Court, and Chairman of the Board of Directors of the Central Bank of the UAE, is built around five key pillars designed to provide banks with greater liquidity, flexibility and regulatory relief.
Under the measures, banks will be given enhanced access to liquidity, including the ability to draw on reserve balances and access term funding in both dirhams and US dollars.
The Central Bank has also introduced temporary relief on liquidity and funding requirements, allowing lenders more flexibility to continue financing businesses and individuals.
In addition, capital buffer requirements will be eased, enabling banks to use excess capital to support lending, while new provisions will allow greater flexibility in managing credit risk, including postponing the classification of certain loans affected by current conditions.
Authorities also stressed that banks are expected to maintain lending and financial support to customers as part of the broader economic response.
During its second meeting of the year, the Board noted the UAE’s financial system has demonstrated resilience during the current extraordinary circumstances affecting the global and regional markets without any material impact on the banking sector’s health and payment systems.
The bank, which oversees record-high foreign exchange reserves of more than AED 1 trillion (USD 270 billion) and a monetary base cover ratio of 119 per cent, reaffirmed the strong fundamentals of the UAE’s AED 5.4 trillion banking sector.
The overall stock of liquidity held by UAE banks at the CBUAE, combined with their net eligible assets for conventional CBUAE operations, reached close to AED 920 billion (USD 250 billion), of which banks’ reserve balances exceed AED 400 billion (USD 109 billion).
The CBUAE said it remains ready to introduce further measures if needed to safeguard financial stability.
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