UAE introduces bank regulatory code

The United Arab Emirates central bank on Friday published corporate governance guidelines for UAE banks aiming to introduce best international practise to the financial sector and rid the country of a reputation for poor internal financial controls and boards compromised by conflicts of interest.

The guidelines, which come after the UAE made up to Dh120bn ($5.5bn) available to support financial institutions through the global financial crisis and help stave off major liquidity issues in the sector, will help to address some investor concerns about internal controls as the tough operating environment creates pressures such as rising loan defaults.

“Good governance is essential for the long-term success of a bank and good governance depends largely on the skills, experience and knowledge of the directors,” said Sultan Al Suwaidi, central bank governor, in a foreword to the 84-page document. “If a bank fails it affects the whole economy, so directors are the guardians of financial stability.”