The UAE banking sector is fully prepared to support the UAE economy form the potential adverse impact of coronavirus (COVID-19), said Abdul Aziz Al Ghurair, Chairman of UAE Banks Federation during a video conference on Sunday.
“The UAE government and the Central Bank of UAE have taken a number of measures to mitigate the impact of the virus outbreak on individuals, businesses and the economy at large. Banks have been adequately supported to help their customers in this difficult time,” said Al Ghurair.
Liquidity support
In recent weeks, the CBUAE announced a Dh256 billion stimulus package to support the economy through the banking sector. These 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 has further extended the duration of the Targeted Economic Support Scheme (TESS). Banks and finance companies participating in the TESS program will be able to extend to their customers’ loan deferrals of principal and interest until December 31.
“We have been discussing with CBUAE to put to work the stimulus package at the most optimal level in the benefit of all deserving customers. Banks have Dh205 billion worth of new liquidity to support their lending. This level liquidity is good enough to support a loan growth of 3 to 4 per cent per year for the next 4 years,” said Al Ghurair.
In addition to the new liquidity, the central bank has made available Dh50 billion in funding that is exclusively dedicated to support commercial companies and individuals, excluding government related entities (GREs).
“There is enough resources made available to banks to support businesses that are facing difficulties. The banking support will be mostly in the form of loan deferrals during this difficult period,” said Al Ghurair.
Gulf News
12/04/2020
