A year after the collapse of Silicon Valley Bank, the International Monetary Fund has warned that US lenders' continued exposure to risk could spark a new financial crisis.
In its global financial stability notes published on Tuesday, the IMF found that high interest rates and tumbling commercial real estate prices still put US banks at risk of failure.
“The high concentration of CRE [commercial real estate] exposures represents a serious risk to small and large banks amid economic uncertainty and higher interest rates,” the IMF said.
The report specifically mentioned a “weak tail of banks” that are vulnerable because of high interest rates.
SVB and banks within this category had an “exceptionally high concentration of CRE exposures”.
“The turmoil also serves as a stark reminder of the impact that rapidly rising interest rates can have by interacting with underlying financial vulnerabilities,” the IMF said.
The IMF said the episode showed how a group of weak banks can force regulators to enact emergency measures, even if that group of banks is “not individually systemic”.
California-based SVB was one of a number of regional lenders – along with Signature Bank and First Republic Bank – to fail as the Federal Reserve raised its interest rates, which caused the value of long-term Treasuries to fall.
That panic extended into Europe, where UBS acquired rival Credit Suisse in a $3.2 billion takeover.
The IMF blamed the banks' management for assuming inflation would be transitory, and not managing the interest rate or liquidity risks associated with it.
“The main culprit was the management of the institutions that ended up in distress,” Tobias Adrian, who co-wrote the report, said during an event at the Brookings Institution in Washington.
Mr Adrian said SVB faced “highly concentrated exposures on both the asset side and the liability side” of its asset sheet, pointing to duration and liquidity risk, as well as the lender's dependence on uninsured deposits.
But federal regulators also hold some responsibility for not flagging the problems faced by SVB sooner, he said.
While the IMF praised the actions taken by the Fed, FDIC and Treasury Department to contain the spread of possible contagion, Mr Adrian said supervisors should have intervened sooner.
A Fed report after SVB's collapse found weaknesses in the US regulator's supervision. SVB had 31 unaddressed warnings at the time of its failures, the report said.
“They did see many of the problems but they hesitated to act,” Mr Adrian said.
The Fed has since taken steps strengthen its supervisory role, including reviewing banks whose profiles show higher interest rate and liquidity risk.
It is also monitoring “potential credit deterioration” in commercial real estate.
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
THE BIO
Bio Box
Role Model: Sheikh Zayed, God bless his soul
Favorite book: Zayed Biography of the leader
Favorite quote: To be or not to be, that is the question, from William Shakespeare's Hamlet
Favorite food: seafood
Favorite place to travel: Lebanon
Favorite movie: Braveheart
Gifts exchanged
- King Charles - replica of President Eisenhower Sword
- Queen Camilla - Tiffany & Co vintage 18-carat gold, diamond and ruby flower brooch
- Donald Trump - hand-bound leather book with Declaration of Independence
- Melania Trump - personalised Anya Hindmarch handbag
Gender pay parity on track in the UAE
The UAE has a good record on gender pay parity, according to Mercer's Total Remuneration Study.
"In some of the lower levels of jobs women tend to be paid more than men, primarily because men are employed in blue collar jobs and women tend to be employed in white collar jobs which pay better," said Ted Raffoul, career products leader, Mena at Mercer. "I am yet to see a company in the UAE – particularly when you are looking at a blue chip multinationals or some of the bigger local companies – that actively discriminates when it comes to gender on pay."
Mr Raffoul said most gender issues are actually due to the cultural class, as the population is dominated by Asian and Arab cultures where men are generally expected to work and earn whereas women are meant to start a family.
"For that reason, we see a different gender gap. There are less women in senior roles because women tend to focus less on this but that’s not due to any companies having a policy penalising women for any reasons – it’s a cultural thing," he said.
As a result, Mr Raffoul said many companies in the UAE are coming up with benefit package programmes to help working mothers and the career development of women in general.
