UAE issues licence to three corporate banks

The UAE Central Bank said yesterday it had issued wholesale banking licences to Deutsche Bank, Bank of Tokyo-Mitsubishi UFJ and Industrial and Commercial Bank of China.

Under the new licence, the banks will be able to take deposits and provide loans to institutions.

The banks "applied for licences in the UAE several years ago. We see the licensing of these banks during current global conditions as positive," the UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi said.

"They are business banks dedicated for companies, government and non-government institutions, but not for individuals. The three banks belong to countries which are major trade partners of the UAE."

The UAE's exports to Japan totalled $29.5 billion, (Dh108bn) $2.7bn to China and $454m to Germany. The UAE's imports from Japan were $8.8bn, $18.7bn from China and $8.6bn from Germany," he said.

Suwaidi said the total deposits held by the UAE banks are higher than the loan issued by them.

He said the loans are not higher than the deposits as was the case before. "Property loans account currently 15.8 per cent of total deposits. Such loans are much lower than reserves available in the banks."

Suwaidi said the banking sector is strong and will use available deposits carefully. The banks have Dh12.6bn in reserves which will enable smooth flow of credit in the banking sector.

Al Suwaidi said the banks did not use up all funding allocated by the Ministry of Finance and Central Bank. "The Central Bank has big resources and the government provided the money through treasury bonds issued recently. On possible mergers among banks, he said: "Mergers depend on the performance of banks and we hope there would be more mergers."

Replying to a question on the inspection of banks, he said: "We started it two months ago. This inspection was very much required to evaluate the impacts of global crisis on the banks. The monitoring of banks is good and is required, whether at the time of crises or at any other time."

Deutsche Bank, already present in the DIFC, plans to start onshore banking operations in Abu Dhabi, said Henry Azzam, CEO, Middle East & North Africa.

"We will open a branch in Abu Dhabi and undertake all services – deposits, loans, trade finance, managing cash, investment banking and others," he said.

Bank of Tokyo-Mitsubishi also plans to open a branch in Abu Dhabi and will cash in on the trade between the UAE and Japan, said Norihiko Kato, Regional Head for the Middle East.

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