The First Abu Dhabi Bank headquarters in Abu Dhabi (FAB)
The First Abu Dhabi Bank in Abu Dhabi. Fifteen leading UAE banks have fully utilised their share of the Dh50 billion liquidity support package provided by the Central Bank of UAE (CBUAE) under its Targeted Economic Support Scheme (TESS). Image Credit: Abdul Rahman/Gulf News

Dubai: The UAE’s banking sector continues to roll out relief measures to individuals and businesses impacted by the COVID-19 outbreak with 15 national banks fully utilizing their share of the Dh50 billion liquidity support package provided by the Central Bank of UAE (CBUAE) under its Targeted Economic Support Scheme (TESS).

Last week, the temporary committee that handles impacts of COVID-19 held its fourth meeting, chaired by Sultan bin Saeed Al Mansouri, Minister of Economy discussed the national efforts to support the economy and the best ways of limiting the effects of the pandemic on various business sectors.

According to the committee, 84.5 per cent of the total incentives under the TESS programme of the CBUAE was utilized by 25 banks with 15 leading banks utilizing 100 per cent of their shares for the benefit more than 133,000 clients, with many of them being small and medium enterprises (SMEs).


To incentivise banks and finance companies to draw-down more from the TESS liquidity zero cost funding facility designated to be used by impacted private corporate customers, SMEs and individuals, the CBUAE had recently issued a notice that includes additional clarifications on the deferral requests under the TESS and aims to further facilitate the implementation of the scheme.

Following the CBUAE notice all banks and finance companies are required to consider the specific circumstances of impacted borrowers to receive a deferral of repayment within the TESS, as options for granting deferrals include the options such as deferment of principal only; deferment of both interest/profits and principal repayment, and deferment of interest/profits only.

The notice highlighted that the most in-demand option will be for the deferment of both interest/profits and principal repayment, unless the borrower’s circumstances allows for accepting other options.

“CBUAE welcomes initiatives taken by banks to support and relieve their impacted customers without drawing against the TESS programme which is available to them,” the apex bank said in a recent statement.

The UAE Central Bank in Abu Dhabi
The CBUAE has been closely monitoring the utilisation of liquidity support under TESS scheme by banks.

Taking stock

The temporary committee that handles impacts of COVID-19 recently assessed reports on the disbursement of support packages, increasing lending rates and supporting SMEs and local entrepreneurs. The committee also discussed the progress of meetings with global payment networks to reduce credit card interest, which will have a direct impact on the business sector, especially wholesale and retail traders and SMEs.

In addition to the liquidity support provided to the impacted business through the banking system, the committee said there are several initiatives in the pipeline to support the national economy. These packages will cover most affected sectors such as SMEs, the tourism sector, and the trade and manufacturing sectors.

“The UAE’s economy has proven its flexibility and ability to address challenges in previous years, and is considered to be one of the economies in the region capable of overcoming the implications of the pandemic, due to its diversity and competitiveness,” said Al Mansouri.

The committee also discussed ways of protecting wages, in coordination with the Ministry of Human Resources and Emiratisation and the Central Bank of the UAE, through allocating some of the support packages to ensure workers’ wages.

Banks look for guidance

Banks across the UAE have offered relief packages to their customers ranging from one to three months loan deferrals for their retail, SME and corporate customers. While many such deferrals will expire this month, banks contacted by Gulf News said they are looking for the government and central bank guidance on the continuation of the support schemes. 

Massive support to individuals and businesses
In April the CBUAE massively enhanced its liquidity support measures to support the economy to withstand the impact of coronavirus pandemic with a total size of Targeted Economic Support Scheme Dh256 billion ($70 billion, or around 17 per cent of the country’s GDP) from Dh100 billion.
The new central bank measures comprise of 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.
Liquidity relief
A total of Dh256 billion stimulus announced by the CBUAE includes a liquidity relief tool of Dh50 billion offered through banks to eligible customers both individuals and busiensses who wish to apply for a deferment.
Those eligible customers impacted by the effects of the pandemic will not be required to pay their respective bank any installments, consisting of principal and/or interest/profit, for the agreed deferment period. However, any interest/profit accrued during the deferment period on the principal amount, will be paid by the customer at a later date, to be agreed upon with their respective bank.
Banks should not charge any interest/profit on the deferred interest/profit amounts, as per the conditions set by the CBUAE.

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