The Board of Directors of the Central Bank of the UAE (CBUAE), chaired by His Highness Sheikh Mansour bin Zayed Al Nahyan, has approved a proactive Financial Institution Resilience Package. The initiative is designed to reinforce the stability of the UAE’s banking sector and ensure the continued flow of credit to the national economy amid exceptional global and regional circumstances.
The CBUAE confirmed that the UAE financial system remains resilient, with no material impact currently observed on the health of the banking sector or payment systems. The new measures are intended as a pre-emptive framework to safeguard liquidity and support financial institutions in navigating potential market volatility.
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Key Financial Indicators
The package is underpinned by the robust fundamentals of the UAE’s financial landscape. Total banking sector assets are valued at approximately AED 5.4 trillion ($1.47 trillion), while the CBUAE holds record-high foreign exchange reserves exceeding AED 1 trillion ($270 billion). Furthermore, the monetary base cover ratio stands at a strong 119%, and available liquidity held by banks is close to AED 920 billion ($250 billion).
The Five Pillars of the Resilience Package
The CBUAE has structured the support framework around five strategic areas to provide maximum flexibility for licensed financial institutions:
- Monetary Policy Measures: Financial institutions now have enhanced access to reserve balances, up to 30% of the cash reserve requirement, alongside term liquidity facilities in both AED and USD.
- Liquidity and Funding Relief: The Central Bank has provided temporary relief regarding liquidity and stable funding ratios, allowing banks greater flexibility in supporting the UAE economy.
- Capital Buffer Relief: The framework includes a temporary release of the Countercyclical Capital Buffer (CCyB) and the Capital Conservation Buffer (CCB) to encourage continued lending.
- Credit Risk Management: Banks are granted the flexibility to postpone the classification of individual and corporate loans for customers specifically affected by current extraordinary circumstances.
- Continued Financing: Direct guidance has been issued for banks to maintain essential financing services for households and businesses to sustain national economic activity.
Industry Response
The UAE Banks Federation (UBF) has welcomed the package, noting that the measures align with international regulatory standards while addressing specific regional dynamics. The UBF stated that the step underscores the proactive approach of the CBUAE in ensuring the stability of the banking sector and its role in supporting strategic national priorities.
The CBUAE Board reiterated its readiness to deploy further policy tools as necessary to safeguard the financial system and maintain the UAE’s global financial competitiveness.
