Banks shouldn’t blame Dubai for their financial woes, says Alwaleed
Prince Alwaleed bin Talal said banks that loaned money to Dubai World can’t claim to be victims…
December 9, 2009 6:03 by kippreport
Prince Alwaleed bin Talal said banks that loaned money to Dubai World can’t claim to be victims of the emirate’s debt crisis because they should have understood the risks in the first place.
“These banks are very mature banks, and they have to differentiate between a corporate loan and a sovereign loan,” Alwaleed told Bloomberg Television. “When things go sour, you can’t have some banks in the West going to Dubai and saying ‘oops’ and crying wolf and saying, ‘you should have guaranteed those loans.'”
Dubai World, the state-controlled investment firm whose assets include a stake in Las Vegas-based MGM Mirage, is seeking to reschedule payments on about $26 billion of debt. Standard & Poor’s said on October 15 there was a “significant” likelihood that Dubai would help government-related entities such as Dubai World meet debt obligations.
Dubai’s government, however, told Dubai World’s creditors in November that they should help in a restructuring of the holding company because the government hasn’t guaranteed the debt.
Alwaleed said confusion over whether the Dubai government would back Dubai World’s debt “was not helpful at all” and damaged investor confidence in the region.
“However, you have to understand that other countries such as Saudi Arabia, Qatar and neighboring Abu Dhabi are countries to be reckoned with,” Alwaleed said. “With the price of oil where it is now, I don’t think their economies will be shaken at all.”