UAE banks need cenbank approval for board members

UAE banks need cenbank approval for board members

Central bank has the right to disapprove board members in cases where requirements are not satisfied.

April 6, 2011 8:38 by Reuters

The United Arab Emirates’ central bank told lenders on Tuesday to seek its approval before appointing board members, saying this would help ensure that qualified persons sit on the board.

“The Central Bank is keen to ensure that members of boards of directors of banks are individuals of appropriate academic qualification, adequate business and banking experience and a sound character,” said a circular sent to banks, which was seen by Reuters.

The central bank will have the right to disapprove board members in cases where requirements are not satisfied, it said.

Up to now, banks in the UAE were required to secure central bank approval for senior management appointments.

“These are moves by the central bank towards better supervision, more transparency and best practices,” said an executive of an Abu Dhabi-based bank.

“It signals that only qualified persons and with the right credentials can occupy positions as board members in banks,” he said, asking not to be named, citing his bank’s policy.

The UAE’s banking sector has been hit in the past two years by provisions against bad loans and the global economic downturn.

A central bank spokesman declined to comment. (Reporting by Stanley Carvalho; editing by Firouz Sedarat)