Lenders welcome Tess extension by UAE Central Bank

Regulatory body says the industry has survived 'extraordinary times'

Chief executives of UAE banks welcomed the move to extend the Targeted Economic Support Scheme, which they said had helped to manage liquidity and customers concerns throughout the ongoing Covid-19 pandemic.

Lenders said the continued relaxation of various regulatory parameters will help them to continue to stimulate the economy following a meeting with Abdulhamid M. Saeed Alahmadi, governor of the Central Bank of the UAE.

Earlier this month, the Central Bank of the UAE extended the Dh50 billion Tess programme until June 30 next year in an effort to continue supporting the economy.

The scheme was launched in March to support the UAE’s economy through the pandemic, offering zero-cost collateral funding to banks as a way of keeping lending flowing to the broader economy. It was part of an initial package of relief measures worth Dh100bn that also involved relaxing banks’ liquidity and capital requirements. The size of stimulus provided by the bank later increased to Dh256bn.

To date, the Tess programme has benefited more than 310,000 retail customers, nearly 10,000 small and medium sized enterprises and more than 1,500 private sector corporates, the Central Bank said in a statement.

“We are transforming the CBUAE with various initiatives and programmes to make it one of the top central banks globally,” said Mr Alahmadi.

“We are challenging the status quo, incorporating the best technology and building relationships with other central banks and governments across the globe.”

We are transforming the CBUAE with various initiatives and programmes to make it one of the top central banks globally

The meeting discussed the financial stability of UAE banks. Most indicators in the banking industry, including liquidity and capital adequacy ratios, remain stable and there has been a pick-up in various growth indicators in the third quarter of the year, the central bank said.

The UAE banking industry has survived “extraordinary times”, Mr Alahmadi said.

He added that banks need to continue exercising caution and ensuring balance sheets remain robust with sufficient capital, liquidity and provisioning levels. The safety and soundness of the banking system is the top priority of the central bank, Mr Alahmadi said.