UAE Central Bank says lenders have used 30% of Covid-19 support fund

Lenders 'are passing on' money to those affected, governor says

Deputy Prime Minister and Minister of Presidential Affairs, Sheikh Mansour bin Zayed, has been appointed as chairman of the Central Bank of the UAE. Ryan Carter / The National

UAE lenders have tapped 30 per cent of a Dh50 billion Targeted Economic Support Scheme (Tess) facility to help businesses and individuals through the Covid-19 outbreak, the Central Bank of the UAE said on Sunday.

Lenders "are passing on these funds to their customers affected by the Covid-19 pandemic", Governor Abdulhamid Saeed said.

"We will continue to work closely with banks and financial institutions to accelerate their full utilisation of the Tess," Mr Saeed said.

"This requires banks to closely collaborate with us and intensify their efforts to implement the economic stimulus package for the benefit of the banking sector and the UAE economy.”

The support scheme was announced as a Dh100 billion package on March 14, which included a direct Dh50bn injection of funds through zero cost collateralised loans provided by the central bank, plus a relaxation of banks' capital buffers allowing them to increase lending by another Dh50bn.

Further easing of restrictions on capital and liquidity reserves subsequently increased the overall size of the stimulus to Dh256bn.

The central bank also reiterated that lenders remove requirements for small and medium-sized businesses to have a minimum account balance of Dh10,000 before opening accounts.

The regulator also said lenders should speed up the length of time it took to open accounts to no longer than two days – unless potential customers were deemed to be high-risk under anti money-laundering rules.

The central bank said it expected banks to "retain sound lending standards" and treat customers fairly, but added that all banks should participate in the scheme, which is set to run until the end of this year. It also said it will begin to publish details of how individual banks have used the Tess facility, starting next month.

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Coronavirus around the region

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The Covid-19 outbreak represents the biggest challenge to the global economy since the Great Depression of the 1930s, as social distancing measures put in to limit its spread hit industries such as aviation and tourism hard.

Last week, the International Monetary Fund said it expected the global economy to shrink 3 per cent in 2020, a sharp downward revision from its earlier forecast of 3.3 per cent growth. Lower oil prices also mean Middle East and Central Asia economies were projected to contract 2.8 per cent this year.

Banks in Abu Dhabi were undertaking 17 initiatives to help customers affected by Covid-19, such as payment holidays for up to three months on mortgages, personal loans and credit card debts for individuals, and three-month holidays on business loans (with no extra charges) for SMEs.

A group of lenders in Dubai, including Emirates NBD and Dubai Islamic Bank, have begun similar measures.