The National Bank of Abu Dhabi (NBAD) says it has secured a six-month extension to new Central Bank lending limits, giving the capital's biggest lender breathing room to implement controversial regulations by March.
In April, the Central Bank said commercial lenders must ensure that loans to governments and their holding companies do not exceed total capital, and gave banks six months to comply.
The deadline to apply those limits passed on September 30, but at least two of the biggest banks in the country are in breach of the limits. However, it is unclear whether banks aside from NBAD have also obtained an extension. The Central Bank did not respond to requests for comment.
With the deadline postponed, NBAD would renew its efforts to comply with the regulations, said Michael Tomalin, NBAD's chief executive.
"The Central Bank has extended the lending limit to March next year and during that time, we will be talking to the Central Bank with ways in which we hope we can accommodate ourselves into the strategy," he told Zawya Dow Jones on the sidelines of a company event in Kuala Lumpur.
"With some definitional changes, we believe that we can accommodate their strategy and it will not affect our growth in the future," he added.
An NBAD spokesman confirmed Mr Tomalin's comments.
A spokesman for Emirates NBD, which has previously declared itself to be in breach of the limit, said the bank was unavailable for comment.
Abu Dhabi Commercial Bank also declined to comment. The Emirates Banks Association, which is leading negotiations with the Central Bank on behalf of the banking industry, also declined to comment.
Only last week, the Central Bank said the deadline was set in stone.
"There will be no postponement with regard to the implementation of the amended large exposure limits and the Central Bank would deal with compliance issues at banks on a case-by-case basis," a Central Bank spokesman said on Wednesday, four days after the deadline to apply the new rules passed.
Shabbir Malik, a financial analyst at EFG Hermes, expressed surprise that NBAD had secured an extension in light of the Central Bank's earlier comments.
"They've just bought some more time and they're going to discuss this [further] with the Central Bank," he said.
However, Mr Malik added that the development was a quick fix rather than a long-term solution to the problem.
"It's too early to say if this has actually solved the issue," he said. "We need to wait for more clarity from the Central Bank and the other banks."
The apparent easing of the Central Bank's limits comes as NBAD refocuses its attention on tripling the countries where it operates during the next decade, said Qamber Ali Al Mulla, the senior general manager of the bank's international banking division.
"Our strategy is to take the bank from a presence in 14 countries to around 41 countries in the next 10 years," Mr Al Mulla said.
"In the short to medium term our new destinations will be Saudi Arabia, Lebanon, Iraq, India, South Sudan, Turkey, Brazil, Australia, Singapore, Canada, Indonesia, South Korea and Vietnam," he added.
The biggest bank in the capital, NBAD plans to increase its annual earnings to Dh16 billion (US$58.77bn) by 2021, the bank said in a presentation at its shareholder meeting in March - only weeks before the lending limits were announced.
