In 2009 (the latest year for which there is data available), banks in the United Arab Emirates (UAE) saw a dramatic increase in their Tier 2 issuance. Subordinated debt now represents 34% of UAE banks’ regulatory capital base, compared with only 10.1% before the crisis.

The increase could be a one-off, enabling banks to recapitalise without diluting existing shareholders following the global downturn. However, if the trend continues, it will make compliance with new Basel III capital regulations more difficult for UAE banks.

UAE Tier 2 capital increase

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