DUBAI – The UAE Central Bank mandates banks in the emirates to hold 10 percent of their liabilities in liquid assets starting next year to ensure that lenders keep sufficient liquid assets until Basel III Liquidity Coverage Ratio comes into effect in January 2015. Once that happens, the interim ratio will no longer apply as LCR requires banks to hold enough liquid instruments to cover a month of severe cash outflows. The UAE Central Bank, in a notice on its website, said Sunday that physical cash, reserve requirements, central bank instruments and UAE federal government bonds would qualify as such “high-quality liquid assets.” All UAE banks are capitalized with a combined Tier 1 capital of 16.7 percent of risk-weighted assets in March, the new rule is not hard to cope with by the lenders. Banks in the UAE have one of the highest capital adequacy ratios in the world partly because deposit growth has been outpacing lending growth this year. – SG/Agencies
