The Central Bank of the United Arab Emirates (CBUAE) has launched a "resilience package" for banks to help safeguard financial stability and support the broader economy as the Middle East war heightens regional risks.
The package, approved by the CBUAE board on Tuesday, is designed to support the banking sector in light of what the regulator described as "exceptional global and regional circumstances."
Under the measures, banks will be given greater access to liquidity and temporary flexibility to draw on capital buffers to continue supporting credit flows to the UAE economy.
The central bank said the package is underpinned by its foreign exchange reserves of more than 1 trillion dirhams (over $272 billion).
As part of the package, lenders will be allowed enhanced access to reserve balances of up to 30% of cash reserve requirements, alongside term liquidity facilities in both UAE dirhams and US dollars.
The measures also include temporary relief from liquidity and stable funding ratios, as well as the temporary release of the countercyclical capital buffer and capital conservation buffer.
The announcement comes as analysts warn that Gulf lenders could face pressure if the regional conflict worsens. S&P Global Ratings said on Monday that banks in the Gulf could see domestic deposit outflows of as much as $307 billion in a deeper conflict scenario, although it added there were no signs so far of significant foreign or local funding withdrawals.
The CBUAE said liquidity conditions in the sector remain solid, noting that total liquidity held by UAE banks at the central bank, together with their net eligible assets for central bank operations, stood near $250 billion. Of that amount, reserve balances alone exceed $109 billion.
