6. Implementation
The revised limits as given in the Table in Article (2) will apply from the date of publication of these Regulations in the Official Gazette. The exposures that are out of line with the limits contained in the Table are to be regularised at the rate of 20% per annum, i.e. full compliance must be achieved in 5 years. Banks who have exposures outside the limits must provide the Central Bank, within 3 months of the date of implementation of these Regulations, with a detailed time-bound plan of action to achieve full compliance.
Annexures:
B-1 Special Banking Return Forms (BRFs 39, 76-87)
B-2 Explanatory Notes to Special Banking Return Forms
B-3 Credit Conversion Factors (CCFs) under Basel GuidelinesANNEXURE- B MONITORING OF LARGE EXPOSURES Annexure B-1 Special Banking Return Forms (BRFs)
BRF 39
Large Borrowers with 10% Exposure to Bank's Capital
BRF 76
Aggregate Large Exposure Summary Sheet
BRF 77
Federal Government and their Non-Commercial Entities
BRF 78
UAE Local Government and their Non-Commercial Public Sector Entities
BRF 79
Commercial Entities of Federal & Local Governments (Excluding stand-alone GREs)
BRF 80
Stand-alone GREs
BRF 81
Single Borrower or a Group of Related Borrowers
BRF 82
Major Shareholders and Related Entities
BRF 83
Domestic Interbank Exposures
BRF 84
Overseas Interbank Exposures
BRF 85
Exposures within a Banking Group
BRF 86
Exposures to Board Members
BRF 87
Exposures to Bank Staff
Annexure B-2
Explanatory Notes to Special Banking Return Forms on Large Exposures
Annexure B-3
Credit Conversion Factors (CCFs) under Basel Guidelines
BANKING AND MONETARY STATISTICS- LARGE BORROWERS WITH 10%/5% EXPOSURE TO BANK'S CAPITAL- BRF 39 Name of Bank : For the quarter ending: (AED in 000) Name of Single Obligor or Group Names of upto 5 largest entities within the group (if relevant) Funded O/S Unfunded O/S CCF equivalent) Commited Unused limits Total Exposure A. Borrowers/ groups Residents of the UAE (at 10% of the Bank's Capital Base or AED 750 Mln whichever is lower) Total B. Borrowers/ groups Non Resident in the UAE -at 5% of the Bank's Capital Base or AED 500 Mln whichever is lower) Total NOTE: Reporting should include customers where funded and unfunded exposures are in excess of the thresholds defined hereabove FORM NO: BSD/BRF 39-LARGEST EXP/ NOV13 BANKING AND MONETARY STATISTICS- AGGREGATE LARGE EXPOSURE SUMMARY SHEET- BRF 76 Name of the bank: For the quarter ending: (AED in 000) Capital Base (calculated as per CAR Return): Aggregate large exposures under each category Funded O/S, unfunded O/S and committed un-used limits Aggregate regulatory limit (%) BRF Nos No Large Exposure Categories Total exposure As % of capital base 1 Federal Government and their non-commercial entities None BRF-77 2 UAE Local Governments and their non-commercial entities 100% BRF-78 3 Commercial entities of Federal Government and UAE Local Governments (ownership > 50%)- Excluding Stand-alone Entities 100% BRF-79 4.1 Stand-alone commercial entities of Federal Government and UAE Local Governments (GRE rated BBB- or above)-Note 6 Not applicable BRF-80 4.2 A single borrower or a group of related borrowers Not applicable BRF-81 5 Shareholders who own 5% or more of the bank's capital and their related entities 50% BRF-82 6.1 Domestic interbank exposures - Over 1 Year Not applicable BRF-83 6.2 Overseas interbank exposures- Over 1 Year Not applicable BRF-84 7 A bank's subsidiaries and affiliates 25% BRF-85 8 Board Members 25% BRF-86 9 Bank employees (funded and unfunded) 3% BRF-87 NOTES: 1 Exposure is defined as the sum of: funded O/S, unfunded O/S and committed unused limits. Unfunded exposures may be adjusted for Credit Conversion Factors (CCF) in accordance with Basel II. 2 The above definition of Exposure excludes marketable bonds/sukuks that are rated not less than AA- (or equivalent) by one of the top three rating agencies. Such bonds/sukuks should be held to meet Central Bank liquidity requirements or in the trading book and the intention is not to hold such bonds/sukuks to maturity. 3 Exposure to Federal Government includes deals transacted or exposure taken on behalf of Federal Government. 4 Non-commercial entities of the Federal and local Governments will include public utilizes which provide goods or services on non-competitive basis. 5 Commercial entities or GREs of the Federal and Local Governments will include their commercial companies where they own more than 50% share capital of the company. Those where the Government ownership is less than 50% will be reported under the "single borrower" category. 6 A Government Related Entity (GRE) that is profitable and can service its debt obligations from its own resources/ operations, without need for any implicit or explicit government support and holds a rating of not less than BBB- (or equivalent) from one of the top three rating agencies can be treated as a single obligoror "stand-alone entity" for inclusion under item 4.1 of the table. The Government ownership in such entities should not be less than 50%. 7 Total exposures under individual categories should be derived from the annexed supporting BRFs as indicated in the Remarks columns. FORM NO: BSD/BRF-76 LE SUMMARY /NOV13 BANKING AND MONETARY STATISTICS- LE UAE FEDERAL GOVT & THEIR NON-COMMERCIAL ENTITIES- BRF 77 Name of the bank: For the quarter ending: (AED in 000) Capital Base (as per CAR return): Name of the borrowing entity Funded O/S (Excl. Debt Securities) Debt securities Un-Funded O/S Committed unused limits Total exposures Total Exposure FORM NO: BSD/BRF-77 LE FED GOVT /NOV13 Although such exposures fall in the exempted category, these are required to be reported regardless of amount for information. BANKING AND MONETARY STATISTICS- LE UAE LOCAL GOVT & THEIR NON-COMMERCIAL PUBLIC SECTOR ENTITIES - BRF 78 Name of the bank: For the quarter ending: (AED in 000) Capital Base (as per CAR return): Non-Commecial public sector entities (25% limit) Funded O/S (Excl. Debt Securities) Debt securities Unfunded O/S CCF amount Commited unused limits Total exposures As % of capital base Ref No of Central Bank Approval Abu Dhabi (sub total) Dubai (sub total) Sharjah (sub total) Ajman (sub total) UAQ (sub total) RAK (sub total) Fujairah (sub total) A. TOTAL EXPOSURE TO NON-COMMERCIAL ENTITIES UAE local Governments/ Departments (Aggregate limit for the group= 100% of capital base) ABU DHABI DUBAI SHARJAH AJMAN UAQ RAK FUJAIRAH B. TOTAL EXPOSURE TO EMIRATES GOVTS GRAND TOTAL (A+B) LIMIT 100% NOTES: 1. Entities reported on this list must match CB list of PSE 2. All entities falling in this category should be arranged group-wise. O/S must include bonds and sukuks which do not match the criteria of exclusion. Use additional rows as required. 3. All exposures are required to be reported regardless of amount. FORM NO: BSD/BRF-78 LE EM & PSE GOVT /NOV13 BANKING AND MONETARY STATISTICS- LE COMMERCIAL ENTITIES OF FEDERAL & LOCAL GOVT (EXCL STAND-ALONE ENTITIES) - BRF 79 Name of the bank: For the quarter ending: (AED in 000) Capital Base (as per CAR return): Individual limit 25% and aggregate limit, 100% Funded O/S (Excl. Debt Securities) Debt securities Unfunded O/S CCF amount Commited unused limits Total exposures As % of capital base Ref No of Central Bank Approval Abu Dhabi (sub total) Dubai (sub total) Sharjah (sub total) Ajman (sub total) UAQ (sub total) RAK (sub total) Fujairah (sub total) TOTAL EXPOSURE TO COMMERCIAL ENTITIES (100% aggregate limits) NOTES: 1. All entities falling in this category should be arranged group-wise. Use additional rows if required.
2. Exposures must include bonds and sukuks unless they meet the criteria for exclusion.
3. All exposures are required to be reported regardless of amount.
FORM NO: BSD/BRF-79 LE GREs /NOV13 BANKING AND MONETARY STATISTICS-LE STAND ALONE GREs - BRF 80 Name of the bank: For the quarter ending: (AED in 000) Capital Base (as per CAR return): NAME OF STAND ALONE GRE/ ENTITY/GROUP Funded O/S (Excl. Debt Securities) Debt securities Unfunded O/S CCF amount Committed unused limits Total exposures As % of capital base (25% limit) Ref No of Central Bank Approval Total Entities should be arranged group wise. Exposures must include bonds and sukuks unless they meet the meet the criteria for exclusion FORM NO: BSD/BRF 80- LE STAND ALONE GREs/NOV13 BANKING AND MONETARY STATISTICS-LE SINGLE BORROWER OR A GROUP OF RELATED BORROWERS- BRF 81 Name of the bank: For the quarter ending: (AED in 000) Capital Base (as per CAR return): A. Exposure to Resident borrowers/ groups Funded O/S (Excl. Debt Securities) Debt securities Unfunded O/S CCF amount Committed unused limits Total exposures As % of capital base (25% limit) Ref No of Central Bank Approval B. Exposures to Non resident borrowers Total (A+B) Entities should be arranged group wise. Exposures must include bonds and sukuks unless they meet the meet the criteria for exclusion FORM NO: BSD/BRF81- LE SINGLE BORR/NOV13 BANKING AND MONETARY STATISTICS- LARGE EXPOSURE TO MAJOR SHAREHOLDERS & RELATED ENTITIES- BRF 82 Name of the bank: For the quarter ending: (AED in 000) Capital Base (as per CAR return): Shareholders who own 5% or more of bank's capital and their related entities Funded O/S (Excl. Debt Securities) Debt securities Unfunded O/S CCF amount Committed unused limits Total exposures As % of capital base (20% limit) Ref No of Central Bank Approval Total Aggregate Exposure Limit 50% Notes: Exposures to all borrowers/ groups falling in this category are required to be reported though exposures to individual shareholders may be below the limit. FORM NO: BSD/BRF 82-LE SHAREHOLDER/NOV13 BANKING AND MONETARY STATISTICS- LE DOMESTIC INTERBANK EXPOSURE- BRF 83 Name of the bank: For the quarter ending: (AED in 000) Capital Base (as per CAR return): Exposure to banks operating within UAE Funded O/S Inter Bank CDs/Debt Securities Unfunded O/S CCF amount Committed unused limits Total exposure As % of capital base (limit 30%) Ref No of Central Bank Approval 1 Remaining maturity less than one year 2 Remaining maturity more than one year 3 Total domestic interbank 4 List of counter parties where remaining maturity per counterparty is more than one year: Name of banks: TOTAL FORM NO: BSD/BRF 83 -LE DOMESTIC INTERBK/ NOV13 BANKING AND MONETARY STATISTICS- OVERSEAS INTERBANK EXPOSURE- BRF 84 Name of the bank: For the quarter ending: (AED in 000) Capital Base (as per CAR return): Exposure to banks operating outside UAE Funded O/S Inter Bank CDs/Debt Securities Unfunded O/S CCF amount Committed unused limits Total exposure As % of capital base (limit 30%) Ref No of Central Bank Approval 1 Remaining maturity less than one year 2 Remaining maturity more than one year 3 Total foreign interbank List of counter parties where remaining maturity per counterparty is more than one year: Country Name of banks: Total Notes: 1 All foreign banks branches exposure should be reported under the country of their Head Office 2 Exposure to a subsidiary of a foreign bank should be reported in the country where subsidiary is registered. FORM NO: BSD/BRF 84-LE OVERSEAS INTERBK/NOV13 BANKING AND MONETARY STATISTICS- LARGE EXPOSURES WITHIN A BANKING GROUP- BRF 85 Name of the bank: For the quarter ending: (AED in 000) Capital Base (as per CAR return): Name of Entity/ Group % share in capital Funded O/S (Excl. Debt Securities) Inter Bank CDs/Debt Securities Unfunded O/S CCF amount Committed unused limits Total exposure As % of capital base (limit 10%) Ref No of Central Bank Approval 1 Consolidated subsidiaries: 1.1 Financial subsidiaries: 1.2 Non-financial subsidiaries: 1.3 Sub-total 2 Non-consolidated entities: (Parent/ holding company and affiliates) 2.1 Financial entities 2.2 Non-financial entities 2.3 Sub-total 3 Grand total AGGREGATE LIMIT 25% Notes: 1. Exposure to entities part of a banking group to which the reporting bank belongs, should be reported on this form. 2. Equity or quasi equity investments in consolidated/ non-consolidated entities should not be included. Further, only funded exposure should be reported. FORM NO: BSD/BRF 85-LE OVERSEAS INTERBANK/NOV13 BANKING AND MONETARY STATISTICS- LARGE EXPOSURE-BOARD MEMBERS- BRF 86 Name of the bank: For the quarter ending: (AED in 000) Capital Base (as per CAR return): Exposure to board members and their entities/ related entities and group Funded O/S Unfunded O/S CCF amount Committed unused limits Total exposure As % of capital base (limit 5%) Ref No of Central Bank Approval TOTAL AGGREGATE LIMIT 25% Notes: All exposures to board members are required to be reported even though they may be below the limit. Entities should be arranged group-wise. FORM NO: BSD/BRF 86 -LE BOARD/NOV13 BANKING AND MONETARY STATISTICS- EXPOSURE TO BANK STAFF- BRF 87 Name of the bank: For the quarter ending: (AED in 000) Capital Base (as per CAR return): TOTAL OUTSTANDING LOANS TO BANK EMPLOYEES (UNDER REGULATION NO 29/2011) Loan type Number of loans Balance O/S As % of Capital Base Remarks 1 Personal loans (excluding housing) 2 Car Loan 3 Overdraft 4 Credit card outstanding 5 Total (Limit 3%) 6 Total Housing loans LIST OF LOANS WHICH DO NOT MEET THE CRITERIA LAID DOWN IN REGULATIONS 29/2011 S.N. Name of staff Original amount Balance O/S Loan period in months Monthly instalment Interest rate Security/ remarks STAFF HOUSING LOANS WHICH ARE OUTSIDE THE PERVIEW OF BANK'S STAFF HOUSING LOANS POLICY S.N. Name of staff Original amount Balance O/S Loan period Monthly instalment Interest rate Security/ remarks FORM NO: BSD/ BRF 87-STAFF LOANS/NOV13 Annexure B-2
EXPLANATORY NOTES TO SPECIAL BANKING RETURN FORMS (BRFs) FOR LARGE EXPOSURES
(Annexure to Circular No 32/2013)General Instructions for Completing Special Banking Return Forms for Large Exposures
- Banks must refer to Circular No 32/2013 along with Guidelines to Monitoring of Large Exposures and Explanatory Notes to BRFs in order to ensure correct submission of Special Banking Return Forms on Large Exposures.
- The Special BRFs form a part of BRF system and should be uploaded accordingly. BRF 39 is monthly report and BRFs 76 to 87 are quarterly reports which must be submitted along with monthly and quarterly batches as instructed through BRF Platform.
- Except for those exposures secured by cash collaterals, bank guarantees/ stand-by LCs and guarantee from the Federal Government, all other exposures are required to be reported on gross basis.
- BRFs specified hereunder are in the summary form, listing entity/ group exposures and aggregate exposures. Banks however must maintain full details of such exposures including approvals of various types of facilities to group/ relatedentities, collaterals held, status of the accounts, variations and reductions in the exposures, CCF calculations, etc. which will be reviewed by the Central Bank Examiners from time to time.
- All large exposures are required to be reported on consolidated basis (including foreign branches and all financial subsidiaries domestic or international) as per Basel II capital framework. Lending to the same entity by group members that are consolidated, should be reported together and calculated as a percentage of the consolidated capital base. Foreign banks however need not report exposures taken by their head offices or overseas branches.
BRF- 39 Large Exposures at 10% / 15% of the Bank's Capital
A large exposure is defined as those funded and unfunded outstandings and unused committed limits (less provisions, cash collaterals, bank guarantees and Federal Government guarantee) to a single borrower or his group which in total is equal to or exceeds 10% of the bank’s capital base or AED 750 Mln whichever is lower in case of resident borrowers. For Non-Resident borrowers, the above exposure amount has been fixed at 5% of capital base or AED 500 Million whichever is lower for reporting purposes.
In case of group accounts, banks must report the name of the group along with names of 5 largest borrowing entities within the group. Exposures within the banking Group are not to be reported in this form.
Unfunded exposure should include committed unused limits of the borrower with adjustments for Credit Conversion Factor (CCF) in accordance with Annexure B-3.
BRF- 76 Aggregate Large Exposure Summary Sheet
This report lists summary of all large exposures specified in the Article (2) of the Circular on Table of Maximum Large Exposure Limits. The amounts are derived from BRFs 77 to 87 in order to monitor the aggregate exposures under individual categories.
BRF 77 UAE Federal Government and their Non-Commercial Public Sector Entities: Although exempted, reporting under the category is required for information purposes.Exposure to Federal Government will include deals transacted on behalf of Federal Government. BRF 78 UAE Local Governments and their Non-Commercial Entities: Aggregate exposure under this category should not exceed 100% of capital base. The upper limit for individual non-commercial entities is 25%. Borrowing entities falling under this category should be listed Emirate wise. For the purpose of aggregation, all exposures under this category should be reported whether individually they exceed the specified exposure limit or not. BRF 79 Commercial Entities of Federal and Local Governments (Excluding stand-alone GREs): This category includes Government Related Enterprises (GREs). Except for “stand alone” GREs as below, all exposures to relative GREs should be reported whether individually they exceed the specified exposure limit or not. BRF 80 Stand-alone Commercial Entities of Federal and Local Governments: These include Government Related Entities (GREs) which are profitable and can service their debt obligations from their own resources/ operations, without need for any implicit or explicit Government support and hold a rating of not less than BBB- (or equivalent) from one of the top three rating agencies. These will be treated at par with “single borrower” with individual exposure limit of 25% of bank’s capital. No aggregation is required. BRF 81 Single Borrower or a Group of Related Borrowers: This category will include private sector borrowers and companies where the government ownership of shares is less than 50%. In such cases, exposures to an entity or group should not exceed 25% of capital base. No specific aggregate limit has been fixed for this category. Lending to non-residents should be shown separately in the space provided if they exceed specified limit under these regulations. BRF 82 Major Shareholders and Their Related Entities: Where exposures to major shareholders and their entities exceed 20% of bank’s capital individually and 50% collectively. If a board member or his entities fall under the major shareholder category, his exposure should be listed here.
All exposures to major shareholders whether they exceed the regulatory limit or not, should be reported for calculating the aggregate exposure.
BRF 83
BRF 84Domestic and Overseas Interbank Exposures: Inter-bank exposures are exempted from the aggregate limit. However exposures to individual banks for a period over 1 year are not allowed to exceed 30% of bank’s capital base. Local banks should report lending by their overseas branches, where applicable. Foreign banks should report only on UAE operations. BRF 85 LE to Bank’s Subsidiaries and its Affiliates: Exposures to them are subject to 10% individual limit and 25% aggregate limit. In case a consolidated subsidiary or affiliate falls under other BRF as well, such exposures should be reported only in BRF-1. BRF 86 LE to Board Members and Their Related Entities: Their exposure limits are 5% of the bank’s capital base as individual and 25% in aggregate. All exposures to board members whether they exceed the regulatory limit or not, should be reported for calculating the aggregate exposure. If a board member is also a major shareholder of the bank, his exposure should be reported in BRF 86. BRF 87 LE to Bank Staff: Exposure to staff members should be incurred in accordance with Regulations No 29/2011 of 23/02/2011. Aggregate of such exposures should not exceed 3% of the bank’s capital base. Staff housing loans are exempted from the computation of large exposures vide Notice No 30/98 dated 17/1/1998 but those outside the bank’s housing loan policy should be reported. Annexure B-3
CREDIT CONVERSION FACTORS (CCF) UNDER BASEL GUIDELINES
(Annexure to Circular No 32/2013)In accordance with standardized approach under Basel II, banks may apply CCF percentages for off-balance sheet items determining large exposure limits. Since this is only a summarized list, banks may refer to Basel documents for additional information/ clarification.
1. Credit Conversion Factor of 100%
- All direct credit substitutes, including general guarantees of indebtedness and all guarantee type instruments, such as standby letters of credit and acceptances, backing the financial obligations of other parties.
- Credit derivatives such as credit default swaps where the bank provides credit protection.
- Sale and repurchase agreements and asset sales with recourse, where the credit risk remains with the bank.
- Forward asset purchases, forward deposits and commitments for the unpaid portion of partly-paid shares and securities which represent commitments with certain draw-downs.
2. Credit Conversion Factor of 50%
- Transaction-related contingent items e.g. performance bonds, bid bonds warranties and standby letters of credit related to particular transactions.
- Underwriting commitments under note issuance and revolving underwriting facilities.
- Other commitments -Not unconditionally cancellable with an original maturity exceeding one year.
3. Credit Conversion Factor of 20%
- Other commitments not unconditionally cancellable with an original maturity of one year or less.
- Short-term self-liquidating trade-related contingent items e.g. documentary credits collateralised by underlying shipments.
4. Credit Conversion Factor of 0%
- Any commitment that is unconditionally cancelable.
- Any items of doubt may be referred to Basel Team at the Central Bank for their clarification/ decision.