Tuesday 31 March 2009

Tier 1 capital targets may pose challenges for some banks in UAE

Raising Tier 1 capital ratio to 11 per cent by June 30 this year and adding a percentage point by the same date next year could prove a challenge for some small- and medium-sized banks in the UAE, analysts said.

The UAE Ministry of Finance has said banks that receive federal deposits will have to achieve a Tier 1 capital ratio of 12 per cent by next year in two phases.

The ministry, as an initiative to inject liquidity into the banking system recently, has parked Dh50 billion with the national banks – proportional to each bank's asset book size.

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