Basel III to be implemented at UAE Central Bank

The United Arab Emirates (UAE) Central Bank has revealed that it will be adopting the Basel III rules over the coming two years.

 

Mubarak Rashid Al Mansouri, central governor of the bank, made this announcement at a recent financial conference in Abu Dhabi, where he explained the organisation would begin implementing the guidelines soon, with the expectation that they will be in force at the bank by 2018.

 

This move will see the UAE follow in the footsteps of Saudi Arabia, which was classified as compliant with Basel III in September 2015, while Kuwait has said it will be implementing the guidelines across its banks next year.

 

So, what does this step mean for the UAE Central Bank, and for the global risk and compliance sector?

What is Basel III?

Basel III is a set of global banking regulations designed to improve risk management in the industry, alongside forcibly encouraging banks to hold an increased level of capital.

 

Essentially, this means that after implementing Basel III, banks should be better protected during periods of economic stability, as they will have extra capital to fall back on.

 

Therefore, by implementing Basel III, the UAE Central Bank should find itself strengthened, particularly in comparison to global banks that are yet to fully adopt the guidelines, placing it at the forefront of the sector.

 

Traditionally, banks located in the Gulf tend to be better capitalised than their counterparts in the West, as regulators in the East are often much more conservative in their approach. Yet by implementing Basel III as well, the UAE will ensure it is safeguarded to an even greater level in the wake of economic challenges.

What will this mean for the risk and compliance world?

The banks and financial authorities that have already implemented Basel III have typically found this to be a somewhat slow process, as they strive to transform the compliance of their operations for the long term.

 

This means that Mr Al Mansouri’s proposed deadline for full implementation of 2018 is reasonably realistic, should the process go to plan.

 

What’s more, it suggests there could be an increase in risk management and compliance roles in the UAE, as the Central Bank gets on board with the legislation. As a result, those with the right skills for the job may find themselves benefiting from an increase in opportunities in the near future.

 

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