Banks and banking issues in the UAE CH 9. Banks and banking issues in the UAE Introduction Financial Institutions: An establishment that focuses on dealing

Banks and banking issues in the UAE

CH 9


IntroductionFinancial Institutions: An establishment that focuses on dealing with financial transactions, such as investments, loans and deposits. Conventionally, financial institutions are composed of organizations such as banks, trust companies, insurance companies and investment dealers.


IntroductionBank: A financial institution licensed as a receiver of deposits. There are two types of banks: commercial/retail banks and investment banks.

In most countries, banks are regulated by the national government or central bank


IntroductionBank :Commercial banks are mainly concerned with managing withdrawals and deposits as well as supplying short-term loans to individuals and small businesses. Consumers primarily use these banks for basic checking and savings accounts, credit cards, certificates of deposit and sometimes for home mortgages. Investment banks focus on providing services such as underwriting.


Banking regulations in the UAEThe UAE Central Bank is primarily responsible for overseeing banks in the UAE, except in the Dubai International Financial Centre (DIFC), where the regulatory authority is the Dubai Financial Services Authority (DFSA).

Source: UAE Central Bank

Banks and banking issues in the UAEBanking regulations in the UAE• Banks are supervised by the UAE Central Bank through the

various reports that are required to be filed by banks with the UAE Central Bank on a periodic basis.

• Under the Banking Law, the UAE Central Bank is entitled to inspect the books, records and accounts of any bank at its discretion.

• In certain cases, the Central Bank has appointed administrators or representatives to temporarily manage

a bank. • These audits are ordinarily conducted once a year and are reasonably extensive.Source: UAE Banks Federation


Banking regulations in the UAE• Under the Companies Law at least 51 per cent

of any company incorporated in the UAE (outside free zones) must be owned by UAE nationals or entities wholly owned by UAE nationals.

• For financial and monetary intermediaries and finance companies, at least 60 per cent of the shares must be held by UAE nationals or entities wholly owned by UAE nationals.

Source: UAE Banks Federation


Banking regulations in the UAE• Commercial banks in the UAE are incorporated as

public joint-stock companies or as branches of foreign banks.

• Investment banks and other financial institutions may be incorporated as public joint-stock companies or private joint-stock companies or as branches of foreign investment banks and financial institutions.



Banking regulations in the UAEA change in ownership or control of a bank is a relatively rare phenomenon in the UAE.

A majority of the locally incorporatedbanks are owned by the governments or the ruling families of the relevant emirates in which they are based.



Banking regulations in the UAEUAE Banks Federation (UBF) established in 1982 under the name (Emirates Banks Associations). • A professional representative body of the

member banks operating in the UAE. • It advocates the banks interests, and

enhances cooperation and coordination among them so as to upgrade the banking industry for the benefit of the banking sector and national economy.



Banking regulations in the UAEUAE Banks Federation (UBF) has an Advisory Council of Chief Executive Officers, consisting of the CEOs of the national banks in addition to the largest foreign banks. The council oversees the implementation of the policies, follows up on UBF’s activities and makes the necessary decisions on all issues of concern to the banking sector.Members of UBF has reached 51 Banks by 2012


1. Abu Dhabi Commercial Bank (P.L.C.)

2. Abu Dhabi Islamic Bank ( P.L.C.)

3. Ajman Bank

4. Al-Hilal Bank

5. Arab Bank For Investment & Foreign Trade (Al Masraf )

6. Bank Of Sharjah (P.L.C.)

7. Commercial Bank International (P.L.C.)

8. Commercial Bank of Dubai (P.S.C.)

9. Dubai Bank

10. Dubai Islamic Bank (P.J.S.C.)

11. Emirates Investment Bank

12. Emirates Islamic Bank ((P.L.C.)

13. Emirates NBD (P.J.S.C.)

14. First Gulf Bank ( P.L.C.)

15. Invest Bank (P.L.C.)

16. Mashreq Bank (P.L.C.)

17. National Bank Of Abu Dhabi (P.L.C.)

18. National Bank Of Fujairah (P.S.C.)

19. National Bank Of Umm-Al Qaiwain (P.L.C.)

20. Noor Islamic Bank

21. RAK Bank (National Bank Of Ras Al-Khaimah P.S.C.)

22. Sharjah Islamic Bank (P.L.C.)

23. Union National Bank (P.L.C.)

24. United Arab Bank (P.L.C.)

National Banks24

1. Al Ahli Bank Of Kuwait ( K.S.C.)

2. Al Khaliji (France)S.A.

3. Arab African International Bank

4. Arab Bank (P.L.C.)

5. Bank Melli Iran

6. Bank of Baroda

7. Bank Saderat Iran

8. Bank-Audi SAL- Audi Saradar Group

9. Banque Misr

10. Barclays Bank

11. BLOM Bank France

12. BNP Paribas

13. Citibank N.A

14. Credit Agricole Corporate & Investment Bank

15. Deutsche Bank

16. Doha Bank

17. Habib Bank AG. Zurich

18. Habib Bank Limited

19. HSBC Bank Middle East

20. Industrial and Commercial Bank of China

21. Lloyds TSB Bank

22. National Bank Of Bahrain

23. National Bank of Oman

24. Royal Bank of Scotland N.V

25. SAMBA Financial Group

26. Standard Chartered Bank

27. United Bank Limited

International Banks

27

Banks and banking issues in the UAENational Banks’ Performance in the UAETotal assets remarkably grew by approximately 8%to AED 1,791 billion in 2012. The UAE banking sector is reportedly considered thelargest Arab banking sector in terms of assets as it accounts for about 31% of the total volume of banking sector in the GCC region and about 20% of the gross volume of the Arab banking sector as of 31/12/2012.


Deposits


Numbers in Billions

Assets


Assets


Numbers in Billions

Assets


Deposits


Loans


Numbers in Billions

Loans



Development of the Banking System in the UAE:According to Central Bank statistics, the number of national banks remained 23 by the end of 2012. However, their branches rose up to 805 in 2012, compared to 768 branches in 2011. Meanwhile, the branches of the 28 foreign banks operating in the local market rose to 83 by the end of 2012. Total number of all banks and their branches reached 1,111 (945 national + 166 foreign), including exchange offices and electronic banking service units. The number of ATMs linked to UAESWITCH in the State amounted to 4,492 by the end of December 2012, compared to 4,172 ATMs at the end of December 2011.Moreover, the number of debit and credit cards increased to AED 10.4 million at the end of 2012, compared to 10,1 in 2011 reflecting an increase of 296 new cards (+2.3%).

Source: UAE Central Bank


Regional and international Ranking of the UAE Banks:According to "The Banker" issued in July 2012, the number of UAE banks on the list of Top 1000 World Banks was 19 banks, and seven UAE banks ranked among the Top 25 Middle East Banks in terms of Tier 1 capital base. Furthermore, UAE banks occupied 14 positions among the top 100 Arab banks in terms of assets, as stated in the list of Union of Arab Banks issued in June 2012. Fourteen UAE banks were listed among the 50 biggest Gulf banks in the report issued by "Arabian Business" magazine, in terms of the market capitalization of banks listedon the stock markets as at June 2012. (Above ranking is based on latest banks financial numbers as of 31/12/2011)


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Banks and banking issues in the UAE CH 9. Banks and banking issues in the UAE Introduction Financial Institutions: An establishment that focuses on dealing