Monday, 26 October 2009 at 14:50, Reuters, Dubai
The UAE central bank has informed lenders in the country of plans to introduce a new system for classifying loans and provisions, Al Khaleej daily reported on Monday.
The draft regulation specifies five loans categories ranging from "normal", "being monitored", "below normal", "recuperation doubtful" and "lost loans", the paper said.
The circular sent to all banks, investment and finance institutions in the UAE said they have until Wednesday to express any opinions on the plans, according to Al Khaleej.
The regulations classify a loan as below normal if payments have not been made for 90 days, instead of 180 days previously.
"Banks must set up organised procedures they will follow in classifying the loans they grant clients in a way that allows the monitoring and establishing of which accounts appear weak and any lending accounts that could be difficult to recuperate...," the paper reported the circular as saying.
UAE Central Bank Governor Nasser al-Suweidi said last month 13 banks in the country were exposed to Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi and Bros Co (Ahab), whose debt troubles have affected international and local lenders across the Gulf Arab region.
The two firms, which are restructuring their debt, face legal battles in courts in and outside of the region, with some bankers expecting writedowns to affect 120 banks at a cost of $22 billion.
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