To have held a top job for more than two decades is an impressive record for any senior government official, in any country. To have done so during a period when the very foundations of the sector involved seemed to be at risk of crumbling, yet to have calmly managed the response to the crisis and to steer into stable waters beyond is even more impressive.
Such has been the record of the former governor of the UAE Central Bank, Sultan Nasser Al Suwaidi, whose resignation was accepted last week. He had been governor since 1991. Mr Al Suwaidi’s contributions to the stability of the UAE’s banking sector began nearly 30 years ago. In 1985, three local banks were tottering on the verge of collapse. The Central Bank itself, established only four years earlier, had neither the expertise nor the authority to resolve the situation, so the Government, through the Abu Dhabi Investment Authority (ADIA) stepped in. The three banks were merged into a new entity, the Abu Dhabi Commercial Bank (ADCB) with ADIA holding a majority shareholding, and Mr Al Suwaidi returned from a Bahrain-based Gulf bank to take charge of the new institution.
The steady way in which he led ADCB, a start-up with a heavy burden of debt, to profitability within its first year of operations was widely admired. His move to the Central Bank as governor in 1991 was seen, correctly, as an expression of the Government’s determination to ensure that the UAE’s banking system was placed on a firm footing, with a powerful regulatory institution that met international standards.
Few would doubt that Mr Al Suwaidi, thanks to his own efforts and to the support he has enjoyed from the late Sheikh Zayed, President Sheikh Khalifa and others, has achieved that objective.
His period in office has seen huge challenges. These have included the impact of the collapse of the Bank of Credit and Commerce International (BCCI), the reverberations of which continued for many years, the introduction of the Basel I and Basel II Accords, developed by the global banking community as guidelines for the minimal capital requirements for banks, the threats posed to local banks and companies by the property bubble of 2007-2009 and the fallout from the global economic crisis that brought that bubble to an end.
The Central Bank’s $10 billion (Dh36.7bn) support for Dubai as that crisis reached its peak was key to ensuring that the UAE escaped the worst effects of the crisis, while a whole slew of measures since then, such as caps on mortgages and the introduction of limits on the amount local lenders can offer government-related firms, have played a major role in guarding against the taking on of excessive debt for the future.
The Central Bank under Mr Al Suwaidi has addressed the need to improve protection for consumers, too. The clearing of cheques is much faster, the new credit bureau will prevent people from borrowing more than they can repay while controls have been put on retail banking fees. The Switch system and ATMs, essential parts of today’s UAE banking, were also introduced during Mr Al Suwaidi’s tenure. At home, we now have a banking sector that is well-regulated and well-funded, a far cry from what it was when Mr Al Suwaidi took up his post in 1991.
In the aftermath of the September 11 attacks on the United States, the Central Bank played a key role in tackling money laundering and the misuse of the UAE banking system by those who fund terrorism. Internationally, the UAE has earned – and deserves – the reputation of having one of the best banking systems in the developing world.
Despite the challenges, Mr Al Suwaidi has presented an image of being almost unflappable as governor. During the global financial crisis, his willingness to engage with the international media, eager to write stories of impending doom about the UAE economy, helped greatly to steady nerves. In his dealings with financial regulators from other jurisdictions, his firm grasp of complex issues and his invariable courtesy have helped to win great respect for the country and its financial institutions.
I wish Mubarak Rashid Khamis Al Mansouri success in his role as the new governor – he has a hard act to follow. And I wish Mr Al Suwaidi happiness in the retirement he has long sought. He has done the country much good service – and the country knows it.
Peter Hellyer is a consultant specialising in the UAE’s history and culture
