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UPDATE 1-No extension of exposure deadline for UAE banks-c.bank official

(Adds background, analysis)

KUWAIT, Oct 1 (Reuters) - Banks in the United Arab Emirates will not be given an extension of the Sept. 30 deadline for them to limit their exposure to state-linked debt, a UAE central bank official said on Monday.

"There is no extension. It stands as it is," Saif Hadef Al Shamsi, assistant governor for monetary policy and financial stability, told reporters in response to a question on the sidelines of an Arab central bankers' conference in Kuwait.

Shamsi said the UAE central bank would deal on an individual, case-by-case basis with commercial banks on the issue of the deadline. He did not elaborate.

Under new rules, announced in early April with a Sept. 30 deadline, any bank's lending to the governments of the seven-member UAE federation and related entities is capped at 100 percent of its capital base. Lending to a single borrower is limited to 25 percent. There was previously no limit.

The rules aim to prevent any repeat of Dubai's corporate debt crisis, which erupted in 2009 as the real estate market crashed. The crisis was worsened by local banks' excessive exposure to government-related entities (GREs).

But many of the largest UAE banks were believed to be well over the new limits when the deadline passed on Sunday. According to an April research note by Deutsche Bank, the exposures of Emirates NBD and National Bank of Abu Dhabi were at 192 and 199 percent of capital respectively; Abu Dhabi Commercial Bank stood at 108 percent. Since April a large amount of loan assets has not been offered for sale on the secondary market, bankers say.

Since it could be damaging to the banks and the economy if they tried to sell off their loans to GREs quickly, many commercial bankers do not expect the rules to be applied strictly, and they do not think formal sanctions will be levied against lenders which missed the deadline.

(Reporting by Martin Dokoupil; Editing by Amran Abocar and Andrew Torchia)

((andrew.torchia@thomsonreuters.com)(+9715 6681 7277)(Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))

Keywords: EMIRATES CENTRALBANK/LOANS