UAE Central Bank strengthens supervision of banks’ real estate exposure

This Central Bank of the United Arab Emirates It said on Monday that it will use the new standard to monitor banks’ risk exposure real estate, An important department bay The state economy has been sluggish for years.

The regulator said in a statement that it is introducing an “enhanced framework” that will cover all types of on-balance sheet loans and investments, as well as off-balance sheet exposure to the real estate industry.

It stated that this will require “banks to review and improve their internal policies to strengthen robust underwriting, valuation and general risk management of their real estate exposure”.

Residential property prices are at Dubai, one of the UAESince 2014, due to high supply and weak demand, the UAE has been declining, forcing construction companies to lay off staff and halting expansion plans, and leading to an increase in bank non-performing loans.

But the industry rebounded this year, thanks to the successful launch of vaccination and the early relaxation of COVID-19 restrictions. With the opening of the trade and tourism industries, Dubai’s economy has been boosted.

“Banks with higher risk-weighted real estate exposures in their investment portfolios will be subject to broader oversight and review of their underwriting and risk management practices in this area,” Central bank Say.

From December 30, the regulator will give banks a year to strengthen their practices to meet the new requirements.