The Central Bank of the UAE (CBUAE) Board has approved a comprehensive Financial Institution Resilience Package aimed at reinforcing the stability and resilience of the UAE banking sector amidst extraordinary global and regional challenges.
The approval was made during the Board’s second meeting of the year, chaired by His Highness Sheikh Mansour bin Zayed Al Nahyan, Vice President, Deputy Prime Minister, Chairman of the Presidential Court, and Chairman of the Board of Directors of the Central Bank of the UAE (CBUAE).
HH Sheikh Mansour bin Zayed noted that “the CBUAE’s precautionary policies and proactive frameworks have consistently demonstrated their effectiveness in promoting the resilience and preparedness of the financial and banking sector, while ensuring monetary and financial stability. These achievements are a testament to the sustained confidence in our system and the global competitiveness of the UAE’s national economy.”
The Financial Institution Resilience Package focuses on five key pillars designed to provide banks with the flexibility and support needed to maintain stability amid extraordinary global and regional challenges:
Pillar I: Monetary Policy Measures – Enhanced access to reserve balances up to 30 percent of the cash reserve requirement and availability of term liquidity facilities in both AED and USD.
Pillar II: Liquidity and Funding Relief – Temporary relief in liquidity and stable funding ratios to provide banks with greater flexibility to support the UAE economy.
Pillar III: Capital Buffer Relief – Temporary release of the Countercyclical Capital Buffer (CCyB) and Capital Conservation Buffer (CCB) to support the UAE economy.
Pillar IV: Credit Risk Management – Providing flexibility to banks to postpone classification of individual and corporate loans for customers affected by the extraordinary circumstances.
Pillar V: Additional Support – In view of the extraordinary circumstances, and considering the aforementioned support, the CBUAE affirms that banks should continue to provide the required financing services to support their customers and the national economy.
The CBUAE, which oversees record-high foreign exchange reserves of more than $270 billion (AED 1 trillion) and a monetary base cover ratio of 119 percent, reaffirmed the strong fundamentals of the UAE’s banking sector.
The overall stock of liquidity held by UAE banks at the CBUAE, combined with their net eligible assets for conventional CBUAE operations, reached close to $250 billion (AED 920 billion), of which banks’ reserve balances exceed $109 billion (AED 400 billion), as per the statement.
The Board stated in a statement that the UAE’s financial system has demonstrated resilience during the current extraordinary circumstances affecting the global and regional markets without any material impact on the banking sector’s health and payment systems.
