CBUAE Standards re Capital Adequacy of Banks in the UAE

Version Date: December 2022

CONTENTS

I. Introduction and Scope... 3 II. Tier Capital Supply ... 6 III. Tier Capital Instruments ... 21 IV. Credit Risk... 29 V. Counterparty Credit Risk ... 53 VI. Credit Valuation Adjustment (CVA)... 71 VII. Equity Investments in Funds ... 77 VIII. Securitisation... 82 IX. Market Risk ... 122 X. Operational Risk... 144 XI. Pillar 2 – Internal Capital Adequacy Assessment Process (ICAAP) ... 153 XII. Pillar 3 – Market Disclosure ... 181 XIII. Leverage Ratio ... 183 List of Abbreviations... 196

I. Introduction and Scope

I. Introduction

1. The Central Bank seeks to promote the effective and efficient development and functioning of the banking system. To this end, banks are required to manage their capital in a prudent and sustainable manner. It is important that banks' risk exposures are backed by a strong capital base of high quality in order to contribute to the stability of the financial system of the UAE.

2. In introducing these Standards, the Central Bank intends to ensure that banks' capital adequacy is in line with the minimum standards as published by the Basel Committee on Banking Supervisio...