The UAE is in the process of finalizing a new banking law.
This figure includes condensates, which are not covered by the quotas.
The description in this section focuses primarily on commercial banks, with brief mention of the insurance and securities sectors, and the payment systems. For more details on the insurance and securities sectors see Sections III.C and III.D, respectively; for money changers see Section III.E, and payment systems see Part II, Section III and IV.E.
In the BCCI case, only creditors having deposit account balances of less than Dh 20,000 received full repayment. For accounts with balances exceeding Dh 20,000, creditors received partial repayment based on liquidation recoveries.
The payment systems are not regulated by a specific “payments law,” but the authority to operate the payment systems is derived from the Banking Law.
Consideration was given to modeling an oil price shock, but three factors rendered this exercise problematic. First, sufficient data on the impact of oil prices on NPLs were not available. Second, the banks and the CBU argued that this linkage is weak at best. Third, the government has ample resources available and recent changes in the budgetary process compensate for the impact of such shocks for a year or more, providing time for banks to adjust their portfolios.
A repricing-gap model constructs the gap between interest rate-sensitive assets and interest rate-sensitive liabilities for each of several maturity buckets. The cumulative gap measures the cumulative change to the difference between asset and liability maturity categories as the maturity increases.
The liquidity ratio is the sum of banks’ cash assets with the CBU and due from banks to the sum of customer deposits and due to banks. Interbank deposits with over three months to maturity are excluded.
During 1997 and 1998, the U.A.E. securities markets were characterized by extreme price volatility. It was believed that market manipulation and insider dealing contributed to this condition, as well as the availability of 100 percent margin financing provided by many commercial banks. The financial positions of many brokers and investors were severely eroded during this period, forcing many out of the markets completely. As a result, restrictions were placed on commercial banks with respect to margin lending.
Under a 1995 decree, minimum capital for life and non-life separately is being raised in two tranches from Dh 10 million to Dh 50 million by mid-June 2001.
Although this does not seem permissible under a strict reading of the insurance law.
However, these principles are used as a backdrop for the analysis of the securities and insurance sectors in sections III C. and III D., respectively.
No data are available on the volume of daily interbank transactions.
Reserve ratios are 1 percent on time deposits and 14 percent for deposits in current, savings, and call accounts. All bank reserves with the CBU are unremunerated. While reserve averaging is permitted, banks have to maintain the required balances both on average of a 6-day period and over the month as a whole.
One such feature involves the approval of a company’s Articles of Association. In addition to the typical requirements with respect to the inclusion of all prescribed information, a determination must be made regarding the commercial viability of the company’s prospective business activities prior to its registration.
Both the Dubai Financial Market and the Abu Dhabi Securities Market operate their own clearance and settlement facilities using T+2 and T+1 settlements, respectively.
This results in part from the practice of banks accepting post-dated checks in lieu of collateral or formalized liens.
In practice, the CBU prudential requirements have at times exceeded those set out in the Banking Law and supporting regulations and circulars (e.g., especially when dealing with other risks than credit risks and management shortcomings).