THE head of the United Arab Emirates Banks Federation has called for sanctions to be introduced to back up the country’s new mortgage law, including suspending banks from offering real estate products.
The Gulf nation is bringing in new regulations to imposed limits on mortgage lending, to prevent another boom-and-bust cycle after a property market crash in Dubai and Abu Dhabi at the end of the last decade.
That crash saw property prices drop more than 50 per cent and left banks nursing billions of dollars of soured real estate loans.
The new rules, set to come into effect on 1 December, are less stringent than first proposed after extensive lobbying by banks through the UBF. Its head, Abdulaziz Al Ghurair, said the organisation got everything it asked for in negotiations with the central bank, except in relation to limits on mortgages for properties worth over AED5m (£870m); he did not elaborate. Now the federation will approach the central bank to amend the law to include penalties for banks and bankers who break the rules. No formal sanctions are currently in the regulations.
City A.M. Reporter