UAE is looking forward to open up its banking sector by implementing a policy, which will be non-discriminatory for foreign banks, advances Emiratization & maintains security of its financial sector.
UAE is looking forward to open up its banking sector by implementing a policy, which will be non-discriminatory for foreign banks, advances Emiratization & maintains security of its financial sector, said senior manager of UAE Central Bank's International Trade Agreement Team, Ms. Nariman Al Awadi.
She said that the Central Bank is awaiting feedback of national banks & financial organizations regarding Free-trade Agreement (FTA) negotiations with US. She added that major issues in relation with FTA negotiations are Emiratization, ownership, shareholding & board representation, asset security and encouragement & support for growth in private financial sector.
Emiratization refers to a movement of UAE govt. to reduce reliance on foreign employees by employing UAE citizens in private & public sector.
Key demands that UAE has to face in FTA negotiations is removal of bank licensing restrictions, restrictions on establishing foreign bank branches, on ownership of foreign banks & on employment of board members & senior management of any country.
"With foreign competition, UAE banking sector will become more liberalized & competitive. This will lead to consolidation that will be good for country's banking sector as it'll result in increase in efficiency & profits and will also help banks to withstand competition," said an analyst at RNCOS.
Presently, there are some restrictions on overseas banks, looking to setup offices in UAE & conduct direct business. Firstly, branches of these banks need to have a local agent for the company unless the bank has established the office in agreement with govt. The sponsor or agent can be a UAE national or institution (like a free-zone authority). Sponsor may be included in bank's business or can simply act like service provider & provide administrative functions that are legally required.
Moreover, banks must obtain licenses before starting their business operations. Various licenses are available to cover different kinds of trading operations. Apart from these licenses, banks need to register with Chamber of Commerce present in each emirate, where the bank is licensed for operations.
Ownership restrictions, according to the business structure, also exist. For instance, if a firm wants to establish office for conducting direct business operations in the country, the legislation demands a JV (joint venture) with a national firm, which will keep at least 51 % of the JV.
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