Business | Banking
Basel II to be implemented from January
The implementation of the Basel II accord will take effect from January 2008, according to a top official.
- By Ahmed A. Elewa, Staff Reporter
- Published: 00:11 November 27, 2007
Abu Dhabi: The implementation of the Basel II accord will take effect from January 2008, according to a top official.
The modified international framework for handling and processing banks' data, for the purpose of more efficiency in risk management, known as Basel II, sets new standards and benchmarks for commercial banks to follow in relation to the information database and risk management, providing for more transparency and risk control.
"The UAE initiated an awareness campaign three years ago, and some local banks will implement the Basel II accord in full by next January, while other banks will be implementing a simple or standard version of the accord," Sultan Bin Nasser Al Suwaidi, Governor of the UAE Central Bank, told a workshop held in the capital yesterday.
The workshop was organised by the Arab Monetary Fund and the Financial Stability Institute(FSI), an affiliate of the Bank of International Settlement (BIS), with the aim of exploring the arrangements set for the application of the new accord in the Middle East and North Africa (Mena) region, as well as the most recent trends in supervisory topics.
"The growth of the UAE economy will stabilise in 2008 and 2009, given the huge investments in the infrastructure development in the country and the region, which benefits neighbouring countries as well," Al Suwaidi said.
High growth
The country's banking sector recorded remarkable growth, according to the most recent data published by the Central Bank, as the assets exceeded Dh1 trillion (or $271.89 billion), while total deposits grew by 16.7 per cent accompanied with similar growth in lending, many observers expect banks' profitability to grow tangibly by the end of 2007.
"We organised a meeting with the banks' management three years ago as well as other meetings with officials responsible for Basel II implementation, in addition to a dedicated seminar in March 2006, and since then we have been able to identify the shortcomings, and train our inspection personnel," Al Suwaidi said and promised that international banks operating in the UAE will not be negatively affected by the shift.
The participants at the workshop included Nout Wellink, president of Netherlands Bank and chairman of the Basel Committee on Banking Supervision, and FSI chairman Joseph Tosovsky.
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