UAE banks afraid of lending to Brits?
After British defaulters and absconders were unable to be extradited back to the UAE, banks are beginning to worry about lending money to Brits
August 8, 2012 4:00 by M. Aldalou
Should one mishap spoil it for everyone else? Well, after the magistrate court refused to extradite a British absconder and defaulter back to the UAE, the consequences may prove to be detrimental for other Brits living the United Arab Emirates as banks start to worry about their own protection.
While twirling around in a state of panic, several banks in the UAE have begun to wonder whether they should stop lending to certain expatriates, including British nationals, because of the banks’ inability to extradite them in the event that they default on the payment.
This trail of thought surfaced after a British national (Amanda Allen) defaulted on her AED2.38m mortgage from ADCB and then absconded to the United Kingdom. The Abu Dhabi based bank had then filed a few cases in their attempt to extradite her, which, after being tossed out by the magistrate court; subsequently prompted their urge to adapt the policies. Upon her arrival in the United Kingdom, Allen was charged with a three-year sentence for illegally issuing an uncovered cheque.
Some analysts may find reason within the compounds of this potential move, some may understand but not condone it and others will dismiss it as completely ridiculous. To add to the point, there are established banks in the UAE that disagree completely and see that such an extreme move is unnecessary.
“Cases like these are rare, and do not affect credit underwriting policies of retail banks in the UAE… We do not differentiate our credit underwriting standards by nationality and do not intend to do so,” a spokesman from Emirates NBD reportedly said. While analyzing a financial risk is a standard banking procedure, lending on the basis of the ability to extradite a defaulter may not sit well with the population or other financial institutions.
There have been many extradition appeals filed against UK expatriates, but the majority of them were dismissed in regards to loan defaulters.
According to a London-based solicitor, the statistics of these rejected requests may prove to be a strong deterrent for the UAE. On the other hand, another potential step that UAE banks plan to take is asking the borrower to grant them the power of attorney so that, at the very least, the bank will be able to foreclose the property in the event of default.