KHALEEJ TIMES, Wednesday, Mar 24, 2021 | Shaaban 10, 1442
UAE international reserves surge to Dh519b
Emirates:
The international reserves of the UAE banking system have grown by
Dh12.6 billion over three months, from November 2020 to January 2021, to
Dh519 billion, the Central Bank of the UAE (CBUAE) has revealed.
With this rise, the cumulative balance of the country’s international reserves
surged 2.3 per cent compared to the Dh507 billion registered in November last
year.
The continuous surge in the national banking system’s international reserves
underscores its robust financial solvency and its ability to address any
financial and economic conditions and changes to foreign exchange rates, as well
as its capacity to meet the country’s needs from global markets.
The UAE banking system’s international reserves is expected to rise further in
the coming period, reflecting the improvements across the system’s indexes in
recent months.
Recently, the governor of the CBUAE Abdulhamid M. Saeed Alahmadi said that the
overall liquidity of the nation’s banking system has returned to pre-Covid
levels.
“Our base projection envisages recovery of the UAE economy in 2021 with the real
GDP to increase by 2.5 per cent. CBUAE will continue to closely monitor market
and economic developments both in the UAE and globally,” Alahmadi said during a
meeting with CEOs of the largest banks operating within the country, according
to state news agency WAM.
March 15 marked a year since the CBUAE unveiled its Dh100 billion economic
stimulus package, the Targeted Economic Support Scheme (TESS), to help
businesses counter the economic fallout of the Covid-19 pandemic and increase
liquidity within the banking system.
It included Dh50 billion of zero-interest, collateralised loans for UAE-based
banks and Dh50 billion funds freed up from banks’ capital buffers.
According to the CBUAE, the banks’ drawdown of the dedicated TESS zero-cost
liquidity facility was Dh22 billion in March 2021, down from the maximum
drawdown of about Dh44 billion in Q2 2020, consistent with the temporary nature
of the payment deferral scheme.
From the inception of the TESS programme, more than 320,000 customers, including
individuals, small to medium-size enterprises and other private corporations,
have benefitted from it. There are about 175,000 customers under the current
TESS deferral arrangements.
The TESS programme, which was initially launched for a period of six months, was
subsequently renewed. In November 2020, the CBUAE extended the validity of key
components of the TESS scheme including the zero-cost liquidity facility and the
TESS loan deferral and recovery programme until June 30, 2021, along with other
regulatory relief measures, which will remain in place through 2021.
“It is satisfying to see that the TESS programme has yielded positive impact for
the UAE’s banking sector and the wider economy. The introduction of the stimulus
package came at a critical juncture and ensured that banks were able to mitigate
funding and liquidity pressures and maintain their lending capacity,” said
Alahmadi.
In February, the apex bank said that the UAE national banks had returned close
to Dh14.47 billion from the stimulus they received via the TESS programme.
Meanwhile, banks across the UAE have further reduced their payrolls and shut
more branches as the industry continued to move towards digitisation and
cost-cutting amid the coronavirus pandemic, CBUAE data shows.
From October to December 2020, at least 18 branches closed their doors, reducing
the total number of outlets nationwide to 541 at the end of the last quarter.
During the same period, 447 employees in the banking sector lost their jobs,
with the total workforce falling by 1.3 percent to 33,444 at the end of December
2020.
“The need for operating efficiency, cost effectiveness to support banks’ bottom
line is driving digitisation and the closure of branches,” the UAE Central Bank
said in its latest Quarterly Economic Review.
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