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Tue 5 Jan 2016 07:19 PM

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UAE regulator tells banks to seek approval before disclosing dividends

Sources say demand for clearance from the regulator is aimed at safeguarding lenders' capital base

UAE regulator tells banks to seek approval before disclosing dividends

Banks in the United Arab Emirates have been told to get dividends approved by the central bank before announcing the details of payments to markets and shareholders, four banking sources said on Tuesday.

The demand for clearance from the regulator was aimed at safeguarding lenders' capital base and ensuring they did not over-extend themselves as liquidity becomes scarcer, the sources said.

Shareholders have become used to enjoying healthy dividend payouts in recent years as bank earnings surged in line with a strengthening local economy.

But banks' profits have begun to suffer from the impact of lower oil prices in recent months as liquidity has tightened, government deposits have fallen and some small businesses have defaulted on their debt.

Banks often announce proposed dividends in public, before they have been given final approval by the regulator. In some cases, the lenders make clear that the dividends are subject to regulatory approval, but others do not.

Now, the regulator wants banks to stop disclosing dividends until it has approved them.

Nobody was available to comment from the central bank.

One of the sources said in the past some banks had announced a proposed dividend, only for the final amount to be changed after the central bank rejected it.

Banks in the UAE had a capital adequacy ratio of 18.3 percent at the end of September, according to central bank data. That's above the 12 percent required by the regulator.

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