ABU DHABI, June 11 (Reuters) - The United Arab Emirates'
central bank has told banks they may be allowed to exclude bonds
issued by state-linked entities from planned lending limits
slated to take effect later this year, a local newspaper said on
Monday, citing bankers.
In April, the central bank expanded its large-exposure limit
rules for commercial banks, introducing new caps for loans made
to local governments and their entities in the first such change
in nearly two decades.
The ruling would cap lending at 100 percent of a bank's
capital base to governments of the seven-member UAE federation
and their non-commercial entities, and 25 percent to individual
borrowers.
Arabic language daily Al Khaleej, citing unnamed banking
sources, said the central bank has notified banks on an informal
basis that "in principle it does not oppose excluding bonds
issued by government companies subscribed to by the banks from
the permitted credit ratio."
The move is to help banks meet the new exposure targets in
the appropriate timeframe, the newspaper said.
A number of UAE banks - including the country's big two,
Dubai's Emirates NBD and National Bank of Abu Dhabi
- are over the limit and have said they would discuss
with the authorities about how to manage their balance sheets in
light of the rule change.
In May, the central bank said it may grant exemptions to
some banks by potentially extending the September 30 deadline.
The UAE is still recovering from its 2009-2010 corporate
debt crisis. Banks' provisions against bad loans rose 25 percent
from a year earlier to 55.3 billion dirhams ($15.1 billion) last
December, central bank data show.
Officials at the central bank were not immediately available
for comment.
(Reporting By Raissa Kasolowsky and Stanley Carvalho; Editing
by Amran Abocar)