UAE to loosen cap on bank lending to property industry

DUBAI: The United Arab Emirates' central bank is working on new rules that will loosen the cap on bank lending to the struggling real-estate industry.

U.A.E. banks can currently lend as much as 20% of customer deposits to the property industry. That will be raised to a still-undecided figure but lenders that exceed 20% would incur a capital charge, central bank Governor Mubarak Rashed Al Mansoori said in Abu Dhabi on Sunday.

"We need to be flexible," Al Mansoori said at a conference. But banks would "need to asses the risk-return profile of this investment. Is it worthwhile, do I want more capital?"

Banks in the second-biggest Arab economy have called on policy makers to loosen the limit amid a property slump that has affected lending. The United Arab Emirates is studying aid to Lebanon and will make a recommendation to the country's leadership, Emirati Central Bank Gov. Mubarak Rashed al-Mansouri said Sunday.

"We decided to study and recommend to the leadership in light of developments recently," Mansouri said, speaking of possible aid, according to Reuters. Last month, caretaker Prime Minister Saad Hariri visited Abu Dhabi for the UAELebanon Investment Forum, which aimed to encourage Emirati investments in Lebanon and boost economic cooperation. Following the forum, Hariri said the UAE had promised economic support for Lebanon. Mansouri said Sunday that no specifics were agreed upon with Lebanon, hoping the country's situation would improve.