A number of regulatory reliefs announced by the Central Bank of UAE (CBUAE) will soften the impact of coronavirus (COVID-19) on the economy and the banking sector, according to bankers and analysts.
Earlier this week, the CBUAE announced additional measures to support the economy during the coronavirus pandemic that increase the size of its Targeted Economic Support Scheme to Dh256 billion ($70 billion, or around 17 per cent of the country’s GDP) from Dh100 billion.
“The measures will support UAE banks’ liquidity and limit their likely material asset quality deterioration because of the coronavirus outbreak,” said Mik Kabeya, an analyst at rating agency Moody’s,
The new central bank measures include a Dh50 billion capital buffer relief, Dh50 billion zero-cost funding support, Dh95 billion liquidity buffer relief and Dh61 billion reduction-of-cash-reserves requirements for the banking sector.
The latest central bank program comes in the form of a 50 per cent reduction in reserves requirements for demand deposits – from 14 per cent to 7 per cent. This measure will inject liquidity of about Dh61 billion, which can be used to support banks’ lending and their liquidity management.
“The CBUAE continues to take appropriate and necessary actions to support the UAE economy in light of the COVID-19 pandemic. The additional measures announced will effectively relieve the pressure on financial institutions, allowing them to continue to carry out their crucial role as the backbone of the economy,” said said Abdulhamid Saeed, Governor of the Central Bank of the UAE.
Gulf News
08/04/2020
