Wednesday, Mar 02, 2016

Abu Dhabi: Despite plunging oil prices, the UAE’s economy is still “way below the level that triggers danger”, according to Khalifa Al Kindi, chairman of the board of directors of the country’s Central Bank and founder of Abu Dhabi Investment Council.

“We are still way below the level that triggers danger. Our debt [compared] to GDP (Gross Domestic Product) is very low, so I think we still have a long way before worrying about borrowing from the outside world.

Our banks’ Return On Equity (ROE) is much healthier than what you see around the world. In 2005, the National Bank of Dhabi’s return on equity was in the forties. Last year, it was probably around 12 per cent, so the trend in global ROEs is coming down,” Al Kindi said.

He added that the capital requirements from banks should be higher while leverage should be lower.

Speaking at a session on sovereign wealth funds during the Global Financial Markets Forum on Wednesday, he added that media coverage regarding nations tapping into their reserves to balance their federal budgets was “overblown”.

“With oil prices at these levels, you are always going to be exposing your sovereign wealth funds to withdrawals,” Al Kindi said.

By Sarah Diaa Staff Reporter

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