The authorities are supporting both federal and local initiatives aimed at providing sustainable solutions.
The Central Bank of the UAE , the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) and the Dubai Financial Services Authority (DFSA) of Dubai International Financial Centre (DIFC) have issued joint guidance for banks and finance firms in relation to the application of International Financial Reporting Standard 9 (IFRS 9) during the current circumstances caused by COVID-19.
The Authorities regulate and supervise banks and finance companies that may have clients experiencing financial stresses as a result of the Covid-19 outbreak.
The CBUAE has already taken action to provide banks and finance companies a number of relief measures available under the Targeted Economic Support Scheme (TESS), given the economic disruption caused by COVID-19, effective from 15 March 2020.
The Authorities are supporting both federal and local initiatives aimed at providing sustainable solutions to support borrowers who will be utilising government-sponsored debt relief programs at this time.
In addition to these measures the CBUAE, FSRA of ADGM and DFSA believe that the flexibility embedded in the IFRS 9 framework should be employed to cope with the current crisis by banks and finance companies that are part of the TESS. To assist these banks and finance companies, the Authorities will be publishing specific guidance with respect to the calculation of Expected Credit Loss (“ECL”) provisioning under IFRS 9.
The guidance, developed collectively by the Authorities, provides practical solutions for banks and finance companies in managing the impact of the current economic uncertainty on ECL, while remaining compliant with IFRS 9 and promoting consistency of approach.
The overriding objective of the guidance is to ensure that financial reports are based on up to date estimations of the risks faced by banks and finance companies, while recognising the magnitude of support measures implemented by the Authorities, and acknowledging that the decision-making process related to IFRS 9 application will need to be adjusted in the current environment. The joint guidance has been released simultaneously by the Authorities to their regulated banks and finance companies, targeted at those that are participating in the TESS. The Authorities encourage those institutions to review the guidance and reach out to their respective supervisors for further clarification, if required.
“As uncertainty reigns in economies and financial markets worldwide, the UAE government has taken significant measures to support economic stability and preserve liquidity. As an integral part of the UAE’s financial infrastructure, the FSRA has issued this joint guidance for banks and finance companies regarding the practical application of IFRS 9, in order to provide direction for the financial impact management of our firms amidst current economic turmoil.
We pledge our full support to government initiatives as we continue to monitor the situation closely and work with our key counterparts in the country to help companies weather the financial impact of the crisis.” Richard Teng, CEO of the Financial Services Regulatory Authority at ADGM.
Meanwhile, Abu Dhabi National Insurance Company, Adnic, has contributed Dhs3 million to Ma’an Abu Dhabi towards the ‘Together We Are Good’ programme to support the UAE community in addressing the impact of COVID-19.
ADNIC commends the UAE authorities for taking fast and decisive action to fight against the spread of COVID-19 and extends its gratitude to the brave and dedicated work being done by medical professionals and front-line personnel.
“Their collective efforts to protect the safety and well-being of people has been exceptional and is a testament to the values of the UAE.” said an ADNIC statement issued on Sunday. ADNIC has taken a number of steps to support its customers during the outbreak. In support of the national efforts to address the impact of COVID-19 and in line with the preventative measures taken by local authorities, ADNIC has become one of the first insurance companies in the UAE to arrange for teleconsultation facilities for insured members with various medical providers.
With the current situation making it difficult for people to visit a doctor, ADNIC is offering customers reassurance with easy access to consultations in this time of need.
Sheikh Mohamed Bin Saif Al-Nahyan, Chairman of ADNIC, said, “ADNIC is proud to support the UAE Government and community in navigating the different challenges created by the COVID-19 outbreak. In challenging times, it is essential that the business community utilises its resources to help those who need it most.”
“I would like to extend our sincere gratitude to President His Highness Sheikh Khalifa Bin Zayed Al Nahyan; His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai; and His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, for their continued support,” he added.