By Dylan Bowman
Sector must implement reforms if it is to continue current level of growth, DCCI says.
The UAE must open its banking sector up to greater competition if the sector is to sustain its current level of growth in the future, the Dubai Chamber of Commerce and Industry (DCCI) warned on Tuesday.
The DCCI said in a study of the UAE banking sector that despite the sector's strong financial position several reforms were necessary if this was to continue in the long-term.
The chamber said in addition to greater competition, the sector's legal framework needed to be strengthened, as did the regulation and monitoring of bank's exposure to the real estate sector.
Sectoral classification of loans also needed to be improved, it said.
The UAE banking sector is the second largest in the GCC after Saudi Arabia. The sector is not highly concentrated, with the five largest banks accounting for about 44% of the total assets of the banking system, according to the DCCI.
There are 25 foreign banks compared with 21 local banks. The share of foreign banks in total banking assets and deposits declined from 24.1% and 26.1% at end of 2003 to 21.9% and 24.5% at end of 2006 respectively, the DCCI said.