* NBAD discussing new lending limits with c.bank
* Loan growth of 10 pct in 2012
* No immediate bond issue plans
By Stanley Carvalho and David French
ABU DHABI, April 30 National Bank of Abu Dhabi
is in discussions with the United Arab Emirates'
central bank over proposed lending caps on local government
entities and was "confident" a solution would be found, its
chief executive said on Monday.
"We are in active conversations with the central bank. We
are confident that, by the end of these, we will have a solution
that allows the bank to manage its balance sheet," Michael
Tomalin said on a conference call on Monday to discuss earnings
results, which were released last week.
In the first such change in nearly two decades, the central
bank said at the start of April it was imposing new limits of
100 percent of the capital base for all lending by a bank to
governments of the seven-member UAE federation and their
quasi-sovereign entities, and 25 percent to individual
No such limits existed before.
According to a Deutsche Bank note published April
12, NBAD would be hardest hit of the major UAE banks as it had
collective exposure worth 199 percent of its regulatory capital,
ahead of Emirates NBD at 192 percent.
The note warned "although the interpretation of some aspects
of the circular is open to doubt, the new limits will likely
prompt some balance sheet deleveraging for the most affected UAE
banks, with NBAD and ENBD appearing most at risk."
"We don't want to sell off high-quality assets in the Middle
East and be forced to buy lower-quality ones," Tomalin said.
"This would be an unintended consequence which I don't think the
central bank wants to see."
Tomalin didn't expect the new rules, which banks have until
September 30 to comply with, to affect balance sheet growth at
"Our balance sheet will grow through lending - we see a 10
percent growth this year," he said.
Credit growth among most UAE banks has been weak, growing in
low single digits. NBAD saw its loan book grow by 2.3 per cent
in the first quarter of 2012 over the same period last year.
Provisioning will continue at the bank, with NBAD expecting
to budget around 350 million dirhams ($95.3 million) in each
quarter this year.
"It is well within our capacity to absorb," Tomalin said.
NBAD has no immediate requirement to raise debt this year
but will be opportunistic, he said, adding the bank has bond
debt worth 745 million dirhams maturing in 2012 and 89 million
dirhams in 2013.
The bank, the largest in the emirate of Abu Dhabi, priced a
$750 million five-year bond with a yield of 3.304 percent on
($1 = 3.6730 UAE dirhams)
(Editing by Reed Stevenson)