UAE banking industry is safe and secure: Al Suwaidi
The banking industry is safe and secure in the UAE, the Governor of the UAE Central Bank, Sultan Nasser Al Suwaidi, said on Wednesday.
Overall confidence in the UAE banks is justifiably strong, he added, thanks to effective supervision and the fact that there are ‘cautious’ mechanisms in place to safeguard the system.
Addressing a Press conference organised for foreign correspondents invited by the National Media Council to visit the country on the occasion of the UAE’s National Day, Al Suwaidi said that the presence of numerous foreign banks and others from the GCC in the country, as well as the 23 local banks, was an indication of global confidence in the UAE’s banking system.
Looking forward, he said that it “would mean a lot” in terms of a boost to the UAE’s economy if Dubai is chosen later today as the host for the Expo 2020 world exhibition.
Asked how the UAE had been able to avoid the worst effects of the global banking crisis that began in 2008, the governor noted that UAE banks had traditionally been focused on retail and commercial banking, dealing with real assets. In other countries, such as the Untied States and those of Europe, he noted, banks had been heavily involved with financial assets, which could grow very fast. Thus, when irregularities in the financial banking sector was exposed, the UAE was better able to cope, he said.
In response to a question about the lack of a GCC-wide currency, the formation of which has been under discussion for some time, Al Suwaidi said that the UAE had withdrawn from the steps towards monetary union amongst the GCC states because of its view that there can be no unification of the currencies until a Gulf Common market has been established which is a fully-integrated and legally-recognised financial bloc.
Turning to the issue of money laundering and the financing of terrorist activities, and asked to comment on the scope for this within the GCC states, the governor stressed: “The central bank has a series of very effective controls in place to mitigate against such possibilities, and adheres most strongly to international practices. The UAE,” he said, “has very effective laws and regulations in place, and will always apply them rigidly.”
Responding to a question about how relations between the UAE and Iran might be affected by the result of the recent Geneva talks between Iran and the 5+1 group of countries on the issue of Iran’s nuclear programme, the governor pointed out that the UAE adhered to all international agreements on sanctions on Iran and that, as a result, the sanctions had had a considerable effect on the UAE’s economy.
“Trade between the UAE and Iran dropped from $45 billion to $4 billion after the application of sanctions, reflecting our commitment to the sanctions. We are hopeful,” he said, “that in the future, when the sanctions change, the situation will be better and that trade will build again.”
In a comment on the necessity of banks and other financial institutions to display a sense of Corporate Social Responsibility, Al Suwaidi concluded by saying that all banks in the Emirates were eager to promote what he called ‘financial inclusion’ in society, and were supporting government initiatives to support small and medium enterprises, SMEs.
In other remarks, the governor presented a series of figures summarising the current state of the UAE’s banking industry. Total assets of UAE banks were currently around $560 billion, he noted, equivalent to one-third of bank assets in India, an indication of the global significance of the UAE economy.