UAE banks have largest capital in Arab World

An intensive drive to bolster their financial position has sharply boosted the combined capital of the UAE banks and allowed the country to have the largest banking system in the Arab World, according to latest official figures. At the end of 2008, the shareholders equity of the UAE's 24 national banks and 28 foreign units stood at Dh165.5 billion, the highest in the region, showed the figures by the Arab Monetary Fund (AMF), a key Arab League institution.

The report gave no data for 2009 but according to the UAE central bank, the shareholders equity of the 52 banks, covering the capital and reserves, peaked at nearly Dh211.7bn at the end of last October. Saudi Arabia, the largest oil exporter in the world, had dominated the Arab banking sector before it was overtaken by the UAE through 2008 as a result of central bank instructions to force banks to boost their capital base. The drive by the UAE banks gained momentum in the second half of 2008 and through 2009 following the eruption of the global financial upheaval and a severe default problem involving two Saudi family conglomerates.

From around Dh130.8bn at the end of 2007, the combined capital of UAE banks surged by around Dh35bn at the end of 2008 and continued its rapid growth to reach Dh205 billion at the end of the first half of 2009. It swelled to nearly Dh211.7bn in October and climbed to a record Dh217.9bn in November, according to the UAE Central Bank.

Despite a surge in their assets, the capital adequacy of the UAE banks jumped to nearly 18 per cent at the end of September from 17 per cent at the end of June and 13.3 per cent at the end of 2008. The level at the end of lost September was far higher than the 11 per cent floor required by the Central Bank. At the end of 2008, the UAE banks controlled nearly a quarter of the total capital of Arab banks of around US$179bn, the AMF report showed.

The combined capital and reserves of Saudi Arabia's 12 commercial banks totalled around SR131.8bn (Dh130.5 billion) at the end of 2008, the AMF said. Updated data by the Saudi Arabian Monetary Agency, the kingdom's central bank, showed those capital and reserves reached around SR163.6bn at the end of October, far below the UAE bank capital.

Egypt had the third largest Arab banking sector in terms of capital, which stood at around US$17.2bn at the end of 2008.
It was followed by Kuwait, with a combined capital of US$16.5bn and Qatar with around US$13.2bn. In terms of assets, the UAE also emerged as the dominant Arab banking system with around Dh1.47 trillion at the end of 2008, nearly 20 per cent of the combined Arab banks' assets of about US$1,960bn.

For 2009, the UAE central bank figures showed the total assets of the country's banks swelled to a record Dh1,551bn at the end of November. – Emirates Business 24|7