UAE central bank to increase oversight of banks' real estate exposure | Reuters
The Central Bank of the United Arab Emirates said on Monday it would use new criteria to supervise banks' exposure to real estate, a crucial sector of the Gulf state's economy which has been sluggish for years.
The regulator is introducing an "enhanced framework" that will cover all types of on-balance-sheet loans and investments, and off-balance-sheet exposures to the real estate sector, it said in a statement.
This will require "banks to review and improve their internal policies to enhance sound underwriting, valuation and general risk management for their real estate exposures," it said.
Residential property prices in Dubai, one of the UAE's emirates, had been falling since 2014 on high supply and weaker demand, forcing construction firms to cut jobs and halt expansion plans, and leading to rises in banks' bad loans.
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