null Uncertain Impact of Regulatory Changes on UAE Islamic Banks
Uncertain Impact of Regulatory Changes on UAE Islamic Banks
17 Jun 2021 | Thursday Source: Fitch Ratings
Regulatory changes being ushered in by the Higher Sharia Authority (HSA), housed under the UAE central bank, to comply with the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) sharia standards will have uncertain impact on Islamic banks, Fitch Ratings says. HSA's initiatives affect various aspects of Islamic banks' daily operations, including issuing, arranging and investing in sukuk.
In 2020 and early 2021, regulatory standards on Islamic windows, risk management, and the sharia governance of Islamic banks were issued. HSA also issued guidance on London Interbank Offered Rate (LIBOR) transition. We continue to assess any credit implications of these developments on Fitch-rated Islamic banks and sukuk. We believe such initiatives could help increase standardisation in the UAE, and possibly regionally, in the medium-to-long term.
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