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What’s in a credit history?
The Union of Arab Banks recommends regional governments to set up a central credit bureau to help protect banks from defaults. It’s a start.
September 29, 2009 12:24 by Dana El Baltaji
The Union of Arab Banks (UAB), a community of Middle East-based financial intuitions, has called for the establishment of a central credit bureau and risk management firm for banks in the region, reported Gulf News on Monday.
“A unified credit bureau will strengthen the GCC financial sector and lead to greater transparency in the regional economies. Such a move will reduce the possibility of systemic risks to financial sector emerging from corporate frauds,” Adnan Ahmad Yousuf, chairman of the UAB, told the Dubai-based daily.
He added that the central bank governors were informed of the UAB’s recommendation: “The idea was accepted by the governors,” Yousuf said. “The implementation of it will be a significant step towards data sharing and creation of a unified risk management system across the Gulf region.”
However, given the political spats sparked by the decision to make Riyadh, Saudi Arabia the headquarters for the GCC monetary union’s central bank, choosing the location of a regional credit bureau won’t be easy. But that’s another matter altogether.
Out of the 420 banks in 22 Arab countries, 340 of them are members of the UAB. According to Yousuf, the banks have suffered due to the financial crisis, but they do not face significant risks.
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