(Bloomberg) -- The United Arab Emirates' central bank is working on new rules that will loosen the cap on bank lending to the struggling real-estate industry.
U.A.E. banks can currently lend as much as 20% of customer deposits to the property industry. That will be raised to a still-undecided figure but lenders that exceed 20% would incur a capital charge, central bank Governor Mubarak Rashed Al Mansoori said in Abu Dhabi on Sunday.
“We need to be flexible,” Al Mansoori said at a conference. But banks would “need to asses the risk-return profile of this investment. Is it worthwhile, do I want more capital?”
Banks in the second-biggest Arab economy have called on policy makers to loosen the limit amid a property slump that has affected lending.
Al Mansoori also said:
- The U.A.E. economy is expected to expand 2.4% in 2019 and accelerate at a faster pace next year
- U.A.E. banks' third-quarter non-performing loans stood at 6.4%, compared with 5.7% in the year-ago period
To contact the reporters on this story: Arif Sharif in Dubai at asharif2@bloomberg.net;Abeer Abu Omar in Dubai at aabuomar@bloomberg.net
To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Alaa Shahine, Shaji Mathew
©2019 Bloomberg L.P.
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