The UAE’s banking sector will stand with the nation and its people to face the challenges posed by the coronavirus outbreak to public health and the economy, said AbdulAziz Al Ghurair, Chairman of Mashreq and Chairman of UAE Banks Federation (UBF).
“The coronavirus pandemic has presented a very challenging environment for the UAE and the world,” he said. “While the government is doing everything to contain the spread of the virus and protect the public health, the banking sector headed by the Central Bank of UAE (CBUAE) is taking appropriate action to support the economy,” said Al Ghurair.
In recent weeks, the CBUAE announced a Dh260 billion stimulus package to support the economy through the banking sector. These include a Dh50 billion capital buffer relief, Dh50 billion zero-cost funding support, Dh95 billion liquidity buffer relief and Dh61 billion reduction-of-cash-reserves requirements for the banking sector.
The latest central bank program comes in the form of a 50 per cent reduction in reserves requirements for demand deposits – from 14 per cent to 7 per cent. This measure will inject liquidity of about Dh61 billion, which can be used to support banks’ lending and their liquidity management.
The CBUAE has further extended the duration of the Targeted Economic Support Scheme (TESS). Banks and finance companies participating in the TESS program will be able to extend to their customers’ deferrals of principal and interest until December 31.
“The central bank support has been substantial in terms of liquidity and capital. By increasing liquidity in the banking sector, it will provide further stability in these uncertain times, and allow banks to offer additional lending and support to critical sectors of the economy.”
Al Ghurair said the banking sector in the country has responded proactively to support individuals and businesses impacted by the outbreak. “Everyone in the country is impacted one way or the other,” the Mashreqbank chief said. “In this crisis we have to support one another. All banks have come out with specific measures to support their customers impacted by the pandemic.”
While job losses are reported across various sectors, Al Ghurair said banking sector and most other industrial sectors will try their best to retain their employees. But if the outbreak prolongs for a long time, it could result in job losses.