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2.8 Board Members

C 32/2013 GUI
  1. 2.8.1 A bank is not allowed to incur a funded or unfunded exposure to a member of its board of directors, or of a similar designated body, which exceeds 5% of its capital base. All such exposures, taken together must not exceed 25 % of the capital base.
  2. 2.8.2 Where a member of a bank's board of directors, or of a similar designated body, is part of a group of related borrowers, total exposures to him must be included under the group. Similarly, the group's exposures must be taken into consideration when calculating the member's exposures which are not allowed to exceed 5% of a bank's capital base. Where such member is also a principal shareholder, the rules set out in Para 2.5 will apply.
  3. 2.8.3 Exposures must be measured on a gross basis. However collaterals mentioned in para 1.1 are allowed to be deducted for arriving at the net exposure.
  4. 2.8.4 Where a bank incurs an exposure for the purpose of real estate financing, fully registered mortgages are required.
  5. 2.8.5 Exposures shall only be incurred on a commercial basis and on market terms. Moreover, the fact that the borrower is a member of the board of directors or of a similar designated body must in no way influence the bank's credit assessment and decision.
  6. 2.8.5 A bank must ensure full recovery of all exposures to members of its board of directors or of a similar designated body.
  7. 2.8.6 Branches of foreign banks operating in the UAE are not allowed to incur an exposure to their board members who are working abroad.
  8. 2.8.7 In case a bank is obliged to book interest due from an exposure to a member of its board of directors, or of a similar designated body, in a suspense account and/or to make a bad debt provision and/or to write off an exposure, either partly or fully, the following rules shall apply:
     
    1. In case of UAE incorporated banks, the board of directors must obtain the approval of the bank's general assembly, in the presence of the bank's external auditors, and a copy of the meeting's minutes shall be filed with the Central Bank without delay.
    2. In case of branches of foreign banks operating in the U.A.E., the approval of the head office must be obtained and a copy thereof shall be filed with the Central Bank without delay.
    3. The member concerned shall not participate in the decision of the board of directors, or of a similar designated body.
    4. Banks are prohibited from granting any new facilities to a member of its board of directors, or to a member of a similar designated body, after the procedures, mentioned under (a) and (b) above, have been engaged.