The Government will monitor more closely the health of local banks and the quality of their assets, according to a statement released by the Central Bank yesterday.
But it said the banking system had enough access to credit and large enough stores of capital to weather further financial trouble.
Government measures taken in the past year to battle the effects of the financial crisis – including federal government pledges of more than Dh120 billion (US$32.67bn) in emergency funds to the local banking system – have resulted in “a marked improvement in the banking soundness indicators, including liquidity, which we closely monitor”, said Saeed al Hamiz, the director of banking supervision at the Central Bank.
The ratio of liquid assets to short-term liabilities increased from 76 per cent in January to 92 per cent this month in the country’s banking system. The ratio measures how much extra cash banks have on hand compared with their upcoming payments and is used to determine their solvency.
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