Mubarak Rashid Al Mansouri Appointed New Governor Of UAE Central Bank

Mubarak Rashid al-Mansouri, an investment fund chief picked on Monday as the United Arab Emirates’ (UAE) new central bank governor, could further tighten the regulation of the banking sector, bankers and analysts say.

Mansouri’s appointment for a four-year term by UAE President Sheikh Khalifa bin Zayed al-Nahyan came as a surprise, as all the other current board members were confirmed in their posts.

The change, announced in a presidential decree carried by the WAM state news agency, comes less than two years after top Abu Dhabi banker Khalifa Mohammed al-Kindi became the new central bank chairman in November 2012.

Mansouri, the chief executive of Emirates Investment Authority (EIA), a federal investment fund with an estimated $15 billion worth of assets, replaces Sultan Nasser al-Suweidi, who had been at the helm of the central bank since 1991.

A senior Abu Dhabi banker described Mansouri, in his mid-40s, as forward thinking, reserved by nature and close to royal Sheikh Mansour bin Zayed al-Nahyan, UAE Deputy Prime Minister, who is also the chairman of the EIA.

“Having a young governor with experience in the financial area would be beneficial as modernisation sweeps across the UAE’s banking sector,” said the banker, who declined to be named due to sensitivity of the matter.

“Suweidi has been governor for over two decades and infusing young blood to lead the central bank is a welcome change. Mansouri hopefully should bring more dynamism and changes in the UAE’s banking sector,” he said without elaborating.

Mansouri, who served as a central bank board member in the past, also sits on the board of the stock market regulator, the Securities and Commodities Authority, as well as telecom operator Etisalat, Abu Dhabi Securities Exchange and some other Abu Dhabi entities.

“He definitely has a good knowledge and experience of the central bank’s functionality, as he was a board member for some years,” said a prominent UAE government official.

“It is early days to say about the impact he could create but he is a strong candidate for the post and will be a force to reckon with,” he said.

Suweidi’s term expired in July 2012 and no official announcement had since been made about an extension. An advocate of developing the local bond market, Suweidi helped steer the UAE through the 2008 global crisis and tightened some regulations such as introducing mortgage caps in 2012.

Mansouri’s appointment will become effective with the publication in the official gazette, the WAM said.

The central bank chairman, who heads board meetings and has the final say on policy decisions, is involved in strategic decision-making, while the governor steers the bank’s day-to-day operations and represents it at high-level international events.

POLICY IMPACT

As long as the UAE keeps its dirham currency pegged to the U.S. dollar, the central bank is unlikely to diverge much from the Fed, giving the new governor little room for flexibility.

“It will have no impact on monetary policy, clearly, but could affect regulatory policy in theory,” said an economist, who declined to be named because of the sensitivity of the matter.

“I suspect if at all, there will be tougher restrictions on lending and the real estate sector, and to GREs (government-related entities). But in reality, these decisions are made at the top level and fed to the central bank, so I am not sure it makes much of a difference who is at the helm,” he said.

The UAE economy has recovered strongly from the 2009-2010 Dubai debt crisis, although some banks still face provisioning issues. The International Monetary Fund has warned repeatedly about a risk of another property bubble after house prices in Dubai soared by 30 percent over the past year.