Abdul Aziz Al Ghurair, centre, the chairman of the UAE Banks Federation, said that new limits on banks’ lending to GREs would be announced in the next two months. Razan Alzayani / The National
Abdul Aziz Al Ghurair, centre, the chairman of the UAE Banks Federation, said that new limits on banks’ lending to GREs would be announced in the next two months. Razan Alzayani / The National

UAE lenders reach agreement with Central Bank on exposure to GREs



UAE banks have reached agreement in principle with the Central Bank on new rules governing their exposure to government related enterprises (GREs), the head of the bankers' organisation said yesterday.

Abdul Aziz Al Ghurair, chairman of the UAE Banks Federation (UBF), said that new limits on banks’ lending to GREs would be announced in the next two months, without announcing details of the deal.

He also said that new regulations on the maximum levels of mortgage credit would be agreed by the end of the year, confirming that Emirati nationals would be allowed to borrow up to 85 per cent of the value of their first home, while expatriates would be allowed to take 80 per cent in the form of a mortgage loan.

Lending to GREs was put under Central Bank scrutiny following the financial crisis, when fears arose that some banks had excessive exposures to government and quasi-government debt, endangering their balance sheets.

The Central Bank has proposed a rule that would limit loans to GREs and individual emirates to 100 per cent of their capital, but Mr Al Ghurair said it was likely the limit woud be reduced with the new deal.

“There will be some slight changes from previous levels, downwards, always downwards,” he said.

Some banks opposed the proposed new limits. In a study published this week, analysts at Bank of America Merrill Lynch said that UAE banks’ exposure to government debt was at its highest since the late 1970s, and concluded that there was little chance of the banking authorities enforcing strict limits.

Exposure of all banks to GRE debt was at 104 per cent, the report said, most of that built up when local banks were obliged to take on extra debt after international banks fled the region.

The IMF has also noted the high levels of loans extended by local banks to GREs, singling out the concentration of loans by Emirates NBD. Loans by the bank to the Dubai Government and related borrowers stood at Dh72bn at the end of 2012, according to the IMF.

Mr Al Ghurair, who is also chief executive of Mashreq, said: “An agreement [on GRE limits] is already finalised by the central bank. Now the central bank just has to announce it – I think in the next month, two months max. It’s already passed the board,” he said.

“We will have to wait and see what is the final decision. I’m sure some banks will seek time. There will be some slight changes but the good news is that other loans are growing so the overall proportion of GRE loans is shrinking.”

He added: “The Central Bank said: ‘This is the guideline and we’re willing to sit down with each bank and discuss with them how much time we’re willing to give and what they need to adjust’. If I tell you to lose weight – 10kgs now – you can’t. You need time – it can’t happen overnight.”

The National previously reported that the UBF was looking to have bonds and sukuk excluded from the limit and to allow banks five years to comply with the new rules instead of the six months originally given.

On new mortgage regulations, Mr Ghurair said: “I expect before the end of this year to be announced. It was discussed and the views of the UBF were taken. There is a general agreement on the levels”.

Mortgage levels have been a matter of discussion between lenders and the Central Bank for the past year, with the banks taking the line that the resurgent residential property market might suffer if maximum levels were set too low.

It has since been widely flagged that a deal has been struck allowing Emirati nationals to borrow up to 85 per cent of value for a first home, with expatriates allowed to borrow 80 per cent.

For a second property, the limits would fall to 75 and 65 per cent respectively, if a final deal is agreed.

UAE rugby season

FIXTURES

West Asia Premiership

Dubai Hurricanes v Dubai Knights Eagles

Dubai Tigers v Bahrain

Jebel Ali Dragons v Abu Dhabi Harlequins

UAE Division 1

Dubai Sharks v Dubai Hurricanes II

Al Ain Amblers v Dubai Knights Eagles II

Dubai Tigers II v Abu Dhabi Saracens

Jebel Ali Dragons II v Abu Dhabi Harlequins II

Sharjah Wanderers v Dubai Exiles II

 

LAST SEASON

West Asia Premiership

Winners – Bahrain

Runners-up – Dubai Exiles

UAE Premiership

Winners – Abu Dhabi Harlequins

Runners-up – Jebel Ali Dragons

Dubai Rugby Sevens

Winners – Dubai Hurricanes

Runners-up – Abu Dhabi Harlequins

UAE Conference

Winners – Dubai Tigers

Runners-up – Al Ain Amblers

MATCH INFO

FA Cup fifth round

Chelsea v Manchester United, Monday, 11.30pm (UAE), BeIN Sports

Guns N’ Roses’s last gig before Abu Dhabi was in Hong Kong on November 21. We were there – and here’s what they played, and in what order. You were warned.

  • It’s So Easy
  • Mr Brownstone
  • Chinese Democracy
  • Welcome to the Jungle
  • Double Talkin’ Jive
  • Better
  • Estranged
  • Live and Let Die (Wings cover)
  • Slither (Velvet Revolver cover)
  • Rocket Queen
  • You Could Be Mine
  • Shadow of Your Love
  • Attitude (Misfits cover)
  • Civil War
  • Coma
  • Love Theme from The Godfather (movie cover)
  • Sweet Child O’ Mine
  • Wichita Lineman (Jimmy Webb cover)
  • Wish You Were Here (instrumental Pink Floyd cover)
  • November Rain
  • Black Hole Sun (Soundgarden cover)
  • Knockin’ on Heaven’s Door (Bob Dylan cover)
  • Nightrain

Encore:

  • Patience
  • Don’t Cry
  • The Seeker (The Who cover)
  • Paradise City
Results

5pm: Maiden (PA) Dh80,000 (Turf) 2,200m, Winner: Zalman, Pat Cosgrave (jockey), Helal Al Alawi (trainer)

5.30pm: Maiden (PA) Dh80,000 (T) 1,600m, Winner: Hisham Al Khalediah II, Fernando Jara, Mohamed Daggash.

6pm: Handicap (PA) Dh85,000 (T) 1,600m, Winner: Qader, Adrie de Vries, Jean de Roualle

6.30pm: Abu Dhabi Championship Listed (PA) Dh180,000 (T) 1,600m, Winner: Mujeeb, Fabrice Veron, Eric Lemartinel

7pm: Wathba Stallions Cup Handicap (PA) Dh70,000 (T) 1,600m, Winner: AF Majalis, Tadhg O’Shea, Ernst Oertel

7.30pm: Handicap (TB) Dh90,000 (T) 1,600m, Winner: Shanaghai City, Fabrice Veron, Rashed Bouresly

8pm: Handicap (TB) Dh100,000 (T) 1,400m, Winner: Nayslayer, Bernardo Pinheiro, Jaber Ramadhan

Why it pays to compare

A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.

Route 1: bank transfer

The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.

Total cost: Dh567.25 - around 2.9 per cent of the total amount

Total received: €4,670.30 

Route 2: online platform

The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.

Total cost: Dh74.10, around 0.4 per cent of the transaction

Total received: €4,756

The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.

The biog

Place of birth: Kalba

Family: Mother of eight children and has 10 grandchildren

Favourite traditional dish: Al Harees, a slow cooked porridge-like dish made from boiled cracked or coarsely ground wheat mixed with meat or chicken

Favourite book: My early life by Sheikh Dr Sultan bin Muhammad Al Qasimi, the Ruler of Sharjah

Favourite quote: By Sheikh Zayed, the UAE's Founding Father, “Those who have no past will have no present or future.”

Brief scoreline:

Liverpool 5

Keita 1', Mane 23', 66', Salah 45'+1, 83'

Huddersfield 0

Fifa World Cup Qatar 2022

First match: November 20
Final 16 round: December 3 to 6
Quarter-finals: December 9 and 10
Semi-finals: December 13 and 14
Final: December 18

The Specs

Engine: 1.6-litre 4-cylinder petrol
Power: 118hp
Torque: 149Nm
Transmission: Six-speed automatic
Price: From Dh61,500
On sale: Now

MATCH INFO

Uefa Champions League, semi-final result:

Liverpool 4-0 Barcelona

Liverpool win 4-3 on aggregate

Champions Legaue final: June 1, Madrid

Company profile

Company: Verity

Date started: May 2021

Founders: Kamal Al-Samarrai, Dina Shoman and Omar Al Sharif

Based: Dubai

Sector: FinTech

Size: four team members

Stage: Intially bootstrapped but recently closed its first pre-seed round of $800,000

Investors: Wamda, VentureSouq, Beyond Capital and regional angel investors

Pari

Produced by: Clean Slate Films (Anushka Sharma, Karnesh Sharma) & KriArj Entertainment

Director: Prosit Roy

Starring: Anushka Sharma, Parambrata Chattopadhyay, Ritabhari Chakraborty, Rajat Kapoor, Mansi Multani

Three stars


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