Are you comfortable now with Mashreq’s capital adequacy ratio and provisions against bad debt?
Mashreq has maintained significantly higher than required capital ratios. Our Tier 1 ratio in March was 13.2 per cent and our total capital ratio at that time was 14.3 per cent. In June, after the conversion of Ministry of Finance deposits into Tier 2 capital, our capital adequacy ratio touched 20 per cent (about 14 per cent Tier 1 and six per cent Tier 2). In many other countries shareholders would not allow you to have such a huge capital base! They would say it was a misuse of shareholders’ money and ask for it back, allowing you whatever the regulator wants and perhaps a little bit more. Compare that to US and European regulators requiring four per cent Tier 1 and four per cent Tier 2. We are a conservative business, we have a conservative dividend policy. We tend to keep a cushion on the capital and, nowadays, it’s good to keep capital! In respect of provisions, we have more than adequate provisions. As of December 2008, our provisions were 307 per cent of our non-performing loans
