GCC banking regulations to remain stable in 2022: Fitch

Banks won't quickly return to pre-COVID stringent requirements

  
Image used for illustrative purpose.

Image used for illustrative purpose.

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Banking regulations in the Gulf Cooperation Council (GCC) region will likely remain stable, while governments will continue to be supportive of local banks in 2022, global ratings agency Fitch said in its latest statement. 

Fitch said it also expects that the continued implementation of Basel regimes in the Middle East and Africa region will lead to tighter numerator and risk-weighted asset (RWA) requirements next year. 

“Within the [GCC], we do not expect a quick return to pre-virus stringent requirements… However, policies linked to macro-prudential and financial stability topics (plus supranational needs for African countries) remain important for local banks,” Fitch said. 

However, the ratings agency said that globally, banking rules will be tighter next year, as pre-pandemic norms are returning. 

“Macroprudential requirements will remain in focus, with more regulators to reveal steps to incorporate climate-risks into supervisory reviews. There is potential for spill-over risks linked to higher interest rates, asset bubbles in developed markets, and household risks in emerging market jurisdictions,” noted Monsur Hussain, Fitch’s head of Financial Institutions Research Group. 

Governments rolled out stimulus schemes last year, while several central banks lowered interest rates, to mitigate the economic impact of the coronavirus pandemic.  

In the UAE, the central bank implemented the Targeted Economic Support Scheme (TESS) to boost lending capacity of domestic banks and provide relief to those impacted by the health crisis. 

(Writing by Cleofe Maceda; editing by Mily Chakrabarty) 

Cleofe.maceda@lseg.com 

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