Examination

The CBUAE’s supervision function protects and maintains the strength of the financial industry by assessing risks continuously across licensed financial Institutions. This ensures that licensed firms comply with all regulatory requirements, and ensures their robustness to enhance their sustainability.

Principles of Banking Supervision:

The Basel Committee on Banking Supervision’s Core Principles for Effective Banking Supervision provide the basis for the CBUAE’s banking supervisory processes.

The supervisory principles set out below form the basis for the supervisory activity and actions affecting licensed institutions.

Principle 1: The CBUAE’s emphasis is on risk-focused supervision, prioritising its supervisory activities on the basis of an institution’s risk to the financial system, and in accordance with the CBUAE’s statutory and supervisory objectives..

Principle 2: The CBUAE assesses risks and responds proportionately, according to both the institution’s dynamic risk profile (financial performance, nature of activity, complexity, operating model, governance, structures, risk level, risk controls etc.) and its impact on systemic stability and soundness of the UAE banking and financial sector.

Principle 3: The CBUAE allocates its supervisory resources in accordance with the institutional risk assessment and systemic impact assessment.

Principle 4: The CBUAE applies a system-wide, macro perspective to the micro prudential supervision of banks and banking groups, to assist in identifying, analyzing and taking pre-emptive action to address current or emerging systemic risks that significantly threaten the stability of the banking and financial system.

Principle 5: By calibrating across the sector, the CBUAE ensures that supervisory responses to similar issues are consistent.

Principle 6: The CBUAE endeavours to maintain high standards consistent with international best practice.

Principle 7: The CBUAE considers that ultimate responsibility for organisational risk oversight is borne by the Board and Senior Management of each licensed institution.

Principle 8: By using the Risk Based Supervision (RBS) approach, the CBUAE seeks to reduce the risk and systemic impact of failure, rather than prevent the failure of any institution.

Through an appropriate mix of on-site and off-site supervision, the CBUAE evaluates the condition of licensed institutions, their risk profile, risk management processes, the internal control environment and the corrective measures necessary to address any supervisory concerns.