The United Arab Emirates’ central bank may extend by six months a deadline for banks to comply with new loan rules that limit lending to governments and its entities, Bank of America’s Merrill Lynch unit said.
“We expect the start of implementation to be extended by another six months to end of the first quarter of 2013, and include exceptions that would not derail the overall Dubai government-related entities’ refinancing process,” analyst Jean-Michel Saliba wrote in research note dated today.
Banks in the U.A.E. can lend no more than 100% of their capital to local governments and the same to government- related entities known as GREs, the central bank said in April. There was no limit under previous rules, and banks were to comply with the rules by Sept. 30. The exposure of Emirates NBD PJSC (EMIRATES), the nation’s biggest bank, to sovereign loans was 130% of regulatory capital at the end of 2011, its financial statements show.
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