Emirates NBD Holding Talks With Central Bank on New Loan Rules

Emirates NBD PJSC (EMIRATES), the United Arab Emirates’ biggest bank by total assets, is talking with the central bank about how to conform to new caps on government lending even as the deadline to comply with the rules passed.

“We are talking on a continued basis with the central bank to get to a satisfactory solution,” Chief Executive Officer Rick Pudner said on a conference call today. The Dubai government-controlled bank hopes to conclude talks with the regulator “in the not too distant future,” he said.

The U.A.E. central bank sought to reduce concentration risk when it said April 4 banks cannot lend more than 100 percent of their capital to local governments and the same to government- related entities known as GREs. Institutions had until Sept. 30 to comply. There was no limit under previous rules.

The exposure of Emirates NBD to sovereign and quasi- sovereign clients is 192 percent of regulatory capital, while that of National Bank of Abu Dhabi PJSC and Abu Dhabi Commercial Bank PJSC (ADCB), the second- and third-biggest U.A.E. lenders by total assets, are 199 percent and 108 percent, respectively according to Deutsche Bank AG estimates in April. (APR) National Bank of Abu Dhabi said Oct. 9 it secured a six-month extension to comply with the rules.

Emirates NBD boosted loans to the Dubai government by 6.1 billion dirhams ($1.7 billion) in the third quarter, a statement showed today. The bank’s loans to the Dubai government, which owns a 56 percent stake in the bank, rose to 72.2 billion dirhams at the end of September from 66.1 billion dirhams at the end of June, the results show.

“The lending is mostly quasi-project finance to finance on-going infrastructure projects and facilities in Dubai as well as normal working capital requirements for some of the ministries and departments,” Pudner said on the conference call.

Emirates NBD reported it more than tripled third-quarter profit from a year ago to 640 million dirhams today.

To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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