A Finance Company’s Credit Exposure to a single borrower or group of Related Entities is considered as a Large Credit Exposure, where its value is equal to or exceeds 7% of the Finance Company’s Aggregate Capital Funds. For the purpose of calculating the value of a Large Credit Exposure, a Finance Company may consider whether to deduct any of the following items:
a.
Provisions;
b.
Cash collaterals;
c.
Bank guarantees from U.A.E. Banks; and
d.
Sovereign guarantees.
The items listed under the letters b, c and d of this Article must be legally enforceable.
13.2
The aggregate amount of Large Credit Exposures must not exceed 100% of the Aggregate Capital Funds of a Finance Company.
13.3
In addition to Article 13.2, the Central Bank has defined maximum permissible Credit Exposure limits, as shown in Table 1 below.
Table 1: Maximum Credit Exposure Limits
Borrower
Aggregate percentage of Aggregate Capital Funds
Individual percentage of Aggregate Capital Funds
A single borrower
Not applicable
10%
A group of Related Entities
Not applicable
15%
Principal Shareholders and their Related Entities
20%
10%
Subsidiaries and Affiliates of a Finance Company
20%
10%
Board members
Not allowed
Not allowed
Employees of the Finance Company
2%
Maximum 20 times of salary
External auditors, consultants and lawyers of a Finance Company
Not allowed
Not allowed
13.4
Where a Principal Shareholder is also a member of the board of directors of a Finance Company, Credit Exposures will be considered within the Principal Shareholders' Credit Exposure limits.