12.1 Banks' exposures to the UAE Federal Government, the Central Bank of the UAE, and exposures to other foreign sovereigns rated at least AA- and their central banks are exempted from the large exposure limit.

12.2 A Banks' aggregate exposure to the Emirates Governments, meaning the exposure to all of the Emirates Governments combined and inclusive of exposures to their non-commercial public sector entities, is subject to an aggregate limit of 150% of Tier 1 capital. Exposures directly to the Emirates Governments are not restricted at individual level, but exposures to their non-commercial entities are restricted at individual level to 25% of Tier 1 capital.

12.3 Exposures to the commercial entities of UAE Federal and Emirates Governments are subject to an individual limit of 25% and an aggregate limit of 100% of Tier 1 capital.

12.4 A commercial public sector entity that is selfsustainable, meaning, at a minimum, that it is profitable and can service its debt from its own resources without a need for any implicit or explicit government support, can be considered as a counterparty separate from its government parent subject to Central Bank approval. This public sector entity, and the Group Of Connected Counterparties it belongs to, is then subject to the general large exposure limit, but not to the aggregate limits described in Article 12.2 and 12.3.

12.5 Exposures or parts thereof guaranteed by, or secured by instruments issued by, the counterparties listed in Article 12.1 are exempted from the large exposure limit to the extent that the eligibility criteria for the recognition of credit risk mitigation are met.

12.6 Where two or more entities that are outside the scope of the exemption described in Article 12.1 are controlled by or economically dependent on an entity that falls within the scope of Article 12.1, but are otherwise not connected, those entities need not be deemed to constitute a Group Of Connected Counterparties.

12.7 While the exposures described in Article 12.1 are exempted from the large exposure limit, these exposures must nevertheless be reported if these exposures meet the criteria for definition as a large exposure.

12.8 Where an exposure to an exempted entity is hedged by a credit derivative, an exposure to the provider of the credit protection must nevertheless be recognised in accordance with Articles 9.1 and 11.7 of this regulation.

12.9 Non-commercial public sector entities of the UAE Federal Government are subject to the general large exposure limit as set out in Article 3.1 of this regulation, with the exception of those ‘treated as sovereign' under the credit risk standards.

12.10 The Central Bank may, on an exceptional, temporary and case-by-case basis, increase the aggregate limit set out in Article 12.2. Such an exception will detail the new maximum permissible limits, and the risk-weight add-on applicable to the amounts by which the normal limits as set out in Article 12.2 are exceeded.

12.11 The exemption set out in Article 12.1 also applies to multilateral development banks for which a 0% risk weight applies under the Central Bank's credit risk standards.