6.UAE Sovereigns: The UAE Sovereign asset class consists of exposures to Federal Government and Emirates governments.

7.Federal Government includes all the UAE Federal entities and Central Bank of the UAE (Central Bank). Banks have transition period of 7 years from the date of implementation for exposures to Federal Government that receive a 0% RW, if such exposures are denominated in AED or USD and funded in AED or USD. However, any claim on UAE Federal Government in foreign currency other than USD should be risk weighted according to the published credit risk rating of UAE Federal Government. In the absence of solicited rating for UAE Federal Government, unsolicited ratings are permissible for assigning risk weights for UAE Federal Government exposures.

8.Emirates Governments’ exposures include exposures to the Ruler and the Crown Prince of each emirate acting in the capacity as ruler and crown prince, as well as exposures to the ministries, municipalities and other Emirates government departments. Banks have transition period of 7 years from the date of implementation for exposures to Emirates Governments that receive a 0% RW, if such exposures are denominated in AED or USD and funded in AED or USD. Any claim on Emirates governments in a foreign currency other than USD should be risk weighted according to the rating of the Emirate Government.

9.GCC Sovereigns: If the regulators in GCC exercise their discretion to permit banks in their jurisdiction to allocate a lower risk weight to claims on that jurisdiction’s sovereign, denominated in the domestic currency of that jurisdiction and funded in that currency, the same, lower risk weight may be allocated to such claims (e.g. 0% assigned to the Government of Saudi Arabia if the exposure is denominated and funded in SAR). This is limited only to GCC sovereign exposures and this lower risk weight may be extended to the risk weighting of collateral and guarantees (refer to section on credit risk mitigation).

10.All other exposures to sovereigns should be risk weighted according to the sovereign rating even if the national supervisory authority adopts preferential risk weights.