Sultan bin Nasser al-Suweidi.
The UAE’s banking sector is safe and secure owing to “effective supervision” and “cautious mechanisms to safeguard the system”, according to the Central Bank governor Sultan Nasser Al Suwaidi.
Speaking at a press conference, Al Suwaidi said that total assets of UAE banks stood at $560 billion, which is equivalent to one-third of India’s bank assets.
The central bank governor said that UAE banks’ focus on retail and commercial lending helped them to insulate themselves from the larger crisis, which affected financial institutions across the world in 2008.
He added that the presence of various foreign banks along with 23 local lenders indicates the global confidence in the UAE’s banking system.
Al Suwaidi also dismissed the formation of a GCC wide currency as he said that the currencies cannot be unified until a common Gulf market, which is a recognised financial bloc, is formed. He said that the UAE has withdrawn from a monetary union.
Addressing the issue of money laundering and financing of terrorist activities, Al Suwaidi said that the UAE has strong laws in place to combat such crimes.
“The Central Bank has a series of very effective controls in place to mitigate against such possibilities, and adheres most strongly to international practices,” he said.
With just hours remaining for the announcement of Expo 2020 winner, Al Suwaidi said that it “would mean a lot” for the UAE economy if Dubai is chosen to host the global exhibition.
According to an earlier Barclays report, a successful Expo bid will have a positive impact on the country’s public finance and create lending opportunities for banks from 2016 onwards.
“In the short term, banks could benefit from improved sentiment and confidence towards Dubai, which could translate into lower funding costs for banks and increased spending by consumers and corporates,” said the report.
“Population growth will likely continue to accelerate, perhaps at faster than the current 3.4 per cent per year and hence demand for retail lending is likely to remain strong. We think that current capital and liquidity levels constitute good support for moderate credit expansion.”