The Report analyses the domestic financial & economic performance over the last financial year.   Furthermore, it proposes revisions to the existing prudential framework in line with the international developments and guidelines issued by the Basel Committee on Banking Supervision (the “Basel Committee”) in 2010 (as revised) (the “Basel III Guidelines”). 

This article considers the potential impact of the Report (and by extension the Basel III guidelines) upon banks in the UAE.

Importantly, the Report provides that:

1. the new capital regime will be aligned with the Basel III Guidelines on capital adequacy and will include requirements for enhanced capital in terms of quality and quantity and the application of a new leverage ratio;

2. the definition of capital will change with more emphasis on paid-up capital, retained earnings and disclosed reserves; and