The United Arab Emirates' central bank expanded its large exposure limit rules for commercial banks, introducing new caps for loans made to local governments and their entities in the first such change in nearly two decades.
The oil-reliant UAE economy is recovering from the 2009-2010 debt crisis in Dubai, marked by a $25 billion debt restructuring and record high provisions against bad loans, many of them to government entities. These provisions rose 25 percent to 55.3 billion dirhams ($15.1 billion) in December.
The regulator set new limits of 100 percent of the capital base for all lending by a bank to governments of the seven-member UAE federation and their non-commercial entities, and 25 percent to individual borrowers. No such limits existed before.
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