In recent editorials it has been highlighted the forthcoming launch of Al Etihad Credit Bureau as a boost for the banking sector. While this is undoubtedly correct it should not be misunderstood as something which is therefore prejudicial to bank customers. As many countries that have established credit bureau will verify, they have contributed greatly both to the financial wellbeing of bank customers, and to generally lowering the costs of borrowing.
This subject has been an important one for the UAE Banks Federation in its regular discussions and deliberations over the past few months. While our member banks want to make sure that the launch of the Bureau is smooth and well managed, they recognise the benefits that such a mechanism will bring to the economy as a whole once it is effectively implemented.
The Bureau provides a good example of how the UAE Banks Federation can support the banking sector and the wider economy. It strives not only to advocate best practice and professionalism among UAE banks, but also to ensure that the way they operate is sustainable and that issues as they arise are considered and acted upon collectively and consistently.
The Banks Charter that we launched last year is clear evidence of this. So is the first annual conference that we held in last November, where we gathered to listen to and compare notes with some of the world’s leading financial practitioners and experts. The fact is that what is good for the banking sector tends to be good for the country as a whole, as well as those who live in it.
We have seen excesses in the behaviour of banks internationally in the past few years, and what we have learned more than anything else is that excess is not sustainable, nor is it inevitable. So we try to identify issues that may come up, take prudent measures to try to prevent them, and address them collectively when problems do crop up.
We work closely and continuously with the Central Bank so as to achieve our goals, and we made a number of recommendations last year which were incorporated in the Bank’s new regulations, for instance in mortgage lending and concentrated risk management, as well as the “Direct Debit System”
As this year gets fully under way we are positive about the prospects for the economy as a whole. But we are also conscious that we are not out of the woods entirely. We need to proceed with caution in growing the banking sector, and ensuring that the assets that banks create are one which will be in the interests of their stakeholders, namely their customers and their shareholders.
Apart from doing what we can to support the launch of the Credit Bureau we are also working hard, among other things, to meet the requirements of the “smart government” initiative as it affects the operations of the UAE’s financial institutions. These and other initiatives will we believe help to make 2014 a noteworthy one for this country.
AbdulAziz Al Ghurair
UAE Banks Federation