UAE bank bad loans to worsen
Dubai World exposure means bad loan losses may grow 4 percent.
June 30, 2010 3:20 by Samuel Potter
Maktoob Business reports that the ratio of problem loans for UAE banks may rise by an additional 4 percent as they experience further losses thanks to Dubai World.
“The problem loan ratio for our rated banks is about 4.9 percent. I expect another 4 percent to be added for Dubai World exposure,” said John Tofarides, banking analyst at Moody’s.
The credit ratings agency rates 13 of the largest banks in the region, including Emirates NBD, Abu Dhabi Commercial Bank and National Bank of Abu Dhabi, according to the article.
Speaking to Reuters, Tofarides said UAE lenders face losses of 10 to 20 percent on their exposure to the conglomerate, based on restructuring terms.
“This is on an average. It may vary for different banks. For banks which have an option of dirham-denominated repayment, it could go to the lower end of the average (rather) than the higher,” he said.
Tofarides said banks may wait for the final restructuring agreement to be signed before they begin to book provisions for their exposure to the company.