The Central Bank of the UAE (CBUAE) has extended various measures of its Targeted Economic Support Scheme (TESS) until 30 June 2022 to support the continued recovery of the UAE economy.
According to the statement, “Prudential relief measures regarding banks’ capital buffers and liquidity and stable funding requirements will be extended by six months until 30 June 2022.” These relief measures are available to all banks operating in the UAE in order to assist a balanced and long-term recovery.
“The capital buffer measures involve temporary lowering of the capital conservation buffer, and the capital buffer for systemically-important domestic banks,” as per the statement. The liquidity measures consist of temporary prudential relief on the Liquidity Coverage Ratio, Eligible Liquid Assets Ratio, Net Stable Funding Ratio, and Advances to Stable Resources Ratio.
“The Targeted Economic Support Scheme program has proven its effectiveness in supporting the UAE financial system and economy throughout the pandemic. As the recovery is gaining momentum, the CBUAE has adjusted the Targeted Economic Support Scheme, replacing measures designed to mitigate the immediate negative effects of the pandemic with targeted steps to support the economic recovery.”
Earlier this year, the CBUAE announced that the loan repayment deferral component of the TESS would expire on 31 December 2021, the first step of the Central Bank’s gradual exit strategy from the measures implemented during the pandemic. The TESS initiative, which encourages new lending and financing, will continue until June 30, 2022.
The CBUAE’s gradual exit strategy from the TESS balances the winding-down of TESS measures with its continued commitment to support the UAE’s recovery. “The additional support measures introduced during the pandemic that temporarily remain in force include the reduced cash reserves requirement and the decrease in the required down payment for new mortgage loans,” as per the statement.