The UAE Central Bank cut the reserve requirements for bank demand deposits and increased its economic stimulus package to Dh256 billion ($70bn) to mitigate the impact of the coronavirus outbreak on the country.
Reserve requirements for demand deposits for all banks were halved from 14 per cent to 7 per cent.
"The UAE Central Bank continues to take appropriate and necessary actions to support the UAE economy in light of the Covid-19 pandemic," governor Abdulhamid Saeed said.
The regulator also extended the duration of the Targeted Economic Support Scheme for affected retail and corporate customers, allowing banks and finance companies to defer the principal amount of loans and interest until the end of this year.
The programme was introduced last month to offer collateralised loans from UAE Central Bank funds at zero cost to all lenders in the Emirates and free up funds tied to banks' capital buffers.
On Sunday, the regulator also granted an extension of the capital buffer relief to the end of 2021 and allowed an extension of the zero-cost funding facility until December 31, 2020.
Lenders in the Tess programme can use a third of their current regulatory liquidity buffers. The overall release of regulatory liquidity buffers is estimated at Dh95bn, the regulator said.
The aggregate value of all capital and liquidity measures adopted by the regulator since March 14 has increased to Dh256bn, and consists of Dh50bn in capital buffer relief, Dh50bn in zero-cost funding support, Dh95bn in liquidity buffer relief and a Dh61bn reduction of cash reserve requirements.
"The additional measures announced today will effectively relieve the pressure on financial institutions, allowing them to continue to carry out their crucial role as the backbone of the economy while offering the required relief and continued access to funding for businesses and households,” Mr Saeed said.
The planned enforcement of certain Basel III capital standards will also be postponed until March 31, 2021 for all banks to reduce the operational burden on the financial industry during this challenging period, the regulator said.
A guidance for banks and finance companies on the application of the IFRS 9 financial reporting standard was also issued in collaboration with the regulatory authorities of financial free zones – the Financial Services Regulatory Authority of the Abu Dhabi Global Market and the Dubai Financial Services Authority of the Dubai International Financial Centre.
The regulator's latest measures come as the Covid-19 pandemic continues to gather pace in the West.
More than 1.2 million people have been infected globally and deaths have climbed to almost 65,000, according to the Johns Hopkins University, which is tracking the outbreak. Over 247,000 patients have recovered so far.
The outbreak has hit the global economy, which according to some estimates could contract more than 1.5 per cent this year.
The International Monetary Fund expects recovery to begin only next year. The pandemic has forced governments to shut borders, bringing travel and tourism to a halt. About 75m tourism sector jobs are at risk globally.
The CBUAE continues to take appropriate and necessary actions to support the UAE economy in light of the COVID-19 pandemic."
While governments around the world are ploughing more stimulus funds into their economies, unemployment numbers are surging in the West as companies lay off staff to stay afloat.
The number of new US unemployment insurance claims reached a record of 6.6m for the week ending March 28 – twice as high as the previous record set the week before.
The steps by the UAE Central Bank are "forward-looking, targeted and diverse, demonstrating that we are leveraging the full potential of the tools we have at our disposal, within our mandate", Mr Saeed said.
The regulator "expects banks and finance companies to make active use of the Tess facility, for the benefit of their customers and the UAE economy".
The boost in the stimulus package comes after a similar move by the UAE government, which increased its fiscal stimulus programme to Dh126bn last month.
The package is intended to "cut the cost of doing business, support small businesses and accelerate major infrastructure projects", Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said at the time.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
First Person
Richard Flanagan
Chatto & Windus
Roger Federer's 2018 record
Australian Open Champion
Rotterdam Champion
Indian Wells Runner-up
Miami Second round
Stuttgart Champion
Halle Runner-up
Wimbledon Quarter-finals
Cincinnati Runner-up
US Open Fourth round
Shanghai Semi-finals
Basel Champion
Paris Masters Semi-finals
In-demand jobs and monthly salaries
- Technology expert in robotics and automation: Dh20,000 to Dh40,000
- Energy engineer: Dh25,000 to Dh30,000
- Production engineer: Dh30,000 to Dh40,000
- Data-driven supply chain management professional: Dh30,000 to Dh50,000
- HR leader: Dh40,000 to Dh60,000
- Engineering leader: Dh30,000 to Dh55,000
- Project manager: Dh55,000 to Dh65,000
- Senior reservoir engineer: Dh40,000 to Dh55,000
- Senior drilling engineer: Dh38,000 to Dh46,000
- Senior process engineer: Dh28,000 to Dh38,000
- Senior maintenance engineer: Dh22,000 to Dh34,000
- Field engineer: Dh6,500 to Dh7,500
- Field supervisor: Dh9,000 to Dh12,000
- Field operator: Dh5,000 to Dh7,000
Indoor Cricket World Cup
Venue Insportz, Dubai, September 16-23
UAE squad Saqib Nazir (captain), Aaqib Malik, Fahad Al Hashmi, Isuru Umesh, Nadir Hussain, Sachin Talwar, Nashwan Nasir, Prashath Kumara, Ramveer Rai, Sameer Nayyak, Umar Shah, Vikrant Shetty
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
KILLING OF QASSEM SULEIMANI
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
THE BIO: Martin Van Almsick
Hometown: Cologne, Germany
Family: Wife Hanan Ahmed and their three children, Marrah (23), Tibijan (19), Amon (13)
Favourite dessert: Umm Ali with dark camel milk chocolate flakes
Favourite hobby: Football
Breakfast routine: a tall glass of camel milk
UK's plans to cut net migration
Under the UK government’s proposals, migrants will have to spend 10 years in the UK before being able to apply for citizenship.
Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.
But what are described as "high-contributing" individuals such as doctors and nurses could be fast-tracked through the system.
Language requirements will be increased for all immigration routes to ensure a higher level of English.
Rules will also be laid out for adult dependants, meaning they will have to demonstrate a basic understanding of the language.
The plans also call for stricter tests for colleges and universities offering places to foreign students and a reduction in the time graduates can remain in the UK after their studies from two years to 18 months.
About Housecall
Date started: July 2020
Founders: Omar and Humaid Alzaabi
Based: Abu Dhabi
Sector: HealthTech
# of staff: 10
Funding to date: Self-funded
