The UAE Central Bank is preparing local lenders for new Basel III banking supervision standards by requiring them to hold 10 per cent of their liabilities in liquid assets starting next year, according to new regulations posted on the regulator’s website.
The Central Bank said “high quality liquid assets” that qualify for the new requirement include cash, certificates of deposit, and highly rated local government bonds.
The ratio takes effect in January, but will be supplanted at the end of 2014 by a more complex ‘liquidity coverage ratio’, according to the central bank document. This ratio, the LCR, is one of two that local banks are expected to adhere to as part of their Basel III compliance. The other is the Net Stable Funding Ratio, or NSFR.
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