UAE Central Bank monitoring downsizing in the financial sector

Regulator 'closely following' reduction in headcount to ensure there is no negative impact on regulatory compliance or market conduct

UAE banks remain well capitalised and in a good position to support customers affected by the virus, the central bank said. Ryan Carter /The National.

The UAE Central Bank said it is monitoring recent job cuts in the financial sector to ensure the reduction in headcount does not "adversely" impact the market and that Emiratisation efforts continue.

The regulator issued a statement on Saturday addressing the impact of downsizing in the banking and financial sector on the UAE economy and consumers.

"We are closely following the recent occurrences of downsizing amongst financial institutions in the country to ensure that downsizing is not adversely affecting regulatory compliance and market conduct," the banking regulator said. The regulator said that in the light of "ever-changing" business environment and technological advancements, banks are reviewing their business units as well as cost and revenue base, and making "necessary adjustments" in a "fast evolving" competitive environment.

UAE Central Bank data shows foreign and local banks had 992 fewer employees in December 2019 compared to the same month a year ago, according to the latest report available on its website. Overall, the number of employees at both foreign and local banks reached a total of 35,637 people in December 2019. Redundancies are common and expected as banks have been merging and investing in digitising their operations and scaling back on brick and mortar retail branches.

Banks in the UAE are expected to remain resilient despite tougher operating conditions this year, as Abu Dhabi's fiscal stimulus helps propel the emirate's economy and Expo 2020 boosts tourism activity in Dubai, S&P Global Ratings said in a February report.

Despite pressure on margins, the rating agency expects a “mid-single-digit net lending expansion in 2020”, S&P said in its latest report on banks it rates in the country. Lending growth in the country slowed slightly to 4.5 per cent on annualised basis in the first nine months of 2019, but the ratings agency expects a pick-up to 5 or 6 per cent in this year.

A more resilient financial performance will allow rated UAE lenders to maintain "stable credit profiles in 2020”, barring any unexpected increase in geopolitical risk or a major fall in oil prices, S&P said.

The central bank also said it continues to pursue its efforts towards Emiratisation in banking sector and requires banks in the UAE to hit a 40 per cent Emiratisation target within three years.

"Banks play a major role to increase the rate of Emirati workforce in the sector through offering career opportunities for Emirati graduates and professionals," it said.