Banks are likely to be given a five-year grace period to comply with new rules limiting their exposure to government-related enterprises (GREs), said the chairman of the UAE Banks Federation.
But Abdul Aziz Al Ghurair, who is also the chief executive of Mashreq, suggested that lenders would not be granted exceptions to the regulations. Some lenders had been seeking the exclusion of certain bonds and sukuk.
“There’ll be given a grace period but there will be no exceptions,” Mr Al Ghurair said on the sidelines of the GCC Banking and Financial Markets Conference in Abu Dhabi yesterday.
He said the rules would probably be issued by the end of the year.
Lending to GREs has come under the spotlight since the global financial crisis, when concerns emerged about the scale of banks’ exposure to indebted companies wholly or partly state-owned. The UAE’s Central Bank set limits in April last year, capping the amount a bank could lend to government and related entities at 100 per cent of its capital base. Lending to a single borrower would be curbed at 25 per cent.
The rules were suspended after some banks said they could not meet a September 30 deadline to comply with the new caps.
But as the regulator prepares to dust the proposals off a second time, some analysts have already expressed doubts about their enforcement.
"We continue to see little chance of a timely implementation of the UAE Central Bank circular setting large exposure limits, and see this as a tool for coordination and consultation rather than to force a disorderly GRE deleveraging process," analysts at Bank of America Merrill Lynch wrote in a research report released in September. The report estimated all banks' exposure to GRE debt was at 104 per cent.
The Banks Federation had requested a five-year grace period for the regulations to allow lenders to gradually adjust their holdings. The industry group had also proposed that bonds and sukuk be exempt.
Also yesterday, Mr Al Ghurair said banks were content with the mortgage caps introduced by the Central Bank last week. Home loans will be limited at 60 to 80 per cent of a property's value. For off-plan homes the maximum mortgage will be 50 per cent.
“It is a two-way discussion that went back and forth and we’re happy with it,” Mr Al Ghurair said.
tarnold@thenational.ae
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The years Ramadan fell in May
The specs
Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now
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Tuesday results:
- Singapore bt Malaysia by 29 runs
- UAE bt Oman by 13 runs
- Hong Kong bt Nepal by 3 wickets
Final:
Thursday, UAE v Hong Kong
How to invest in gold
Investors can tap into the gold price by purchasing physical jewellery, coins and even gold bars, but these need to be stored safely and possibly insured.
A cheaper and more straightforward way to benefit from gold price growth is to buy an exchange-traded fund (ETF).
Most advisers suggest sticking to “physical” ETFs. These hold actual gold bullion, bars and coins in a vault on investors’ behalf. Others do not hold gold but use derivatives to track the price instead, adding an extra layer of risk. The two biggest physical gold ETFs are SPDR Gold Trust and iShares Gold Trust.
Another way to invest in gold’s success is to buy gold mining stocks, but Mr Gravier says this brings added risks and can be more volatile. “They have a serious downside potential should the price consolidate.”
Mr Kyprianou says gold and gold miners are two different asset classes. “One is a commodity and the other is a company stock, which means they behave differently.”
Mining companies are a business, susceptible to other market forces, such as worker availability, health and safety, strikes, debt levels, and so on. “These have nothing to do with gold at all. It means that some companies will survive, others won’t.”
By contrast, when gold is mined, it just sits in a vault. “It doesn’t even rust, which means it retains its value,” Mr Kyprianou says.
You may already have exposure to gold miners in your portfolio, say, through an international ETF or actively managed mutual fund.
You could spread this risk with an actively managed fund that invests in a spread of gold miners, with the best known being BlackRock Gold & General. It is up an incredible 55 per cent over the past year, and 240 per cent over five years. As always, past performance is no guide to the future.
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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Game Of Thrones Season Seven: A Bluffers Guide
Want to sound on message about the biggest show on television without actually watching it? Best not to get locked into the labyrinthine tales of revenge and royalty: as Isaac Hempstead Wright put it, all you really need to know from now on is that there’s going to be a huge fight between humans and the armies of undead White Walkers.
The season ended with a dragon captured by the Night King blowing apart the huge wall of ice that separates the human world from its less appealing counterpart. Not that some of the humans in Westeros have been particularly appealing, either.
Anyway, the White Walkers are now free to cause any kind of havoc they wish, and as Liam Cunningham told us: “Westeros may be zombie land after the Night King has finished.” If the various human factions don’t put aside their differences in season 8, we could be looking at The Walking Dead: The Medieval Years.
COMPANY PROFILE
● Company: Bidzi
● Started: 2024
● Founders: Akshay Dosaj and Asif Rashid
● Based: Dubai, UAE
● Industry: M&A
● Funding size: Bootstrapped
● No of employees: Nine