Marginal increase in UAE fuel prices
dubai — Bad loan cases are “dramatically” slowing down in the UAE while about Dh7 billion of problem loans to companies are being renegotiated by banks.
Abdul Aziz Al Ghurair, chairman of the UAE Banks Federation, said under the restructuring guidelines outlined by the UBF, banks had managed to work out Dh4.5 billion SME loans to protect the banking system.
“We have worked out Dh2.5 billion of loans to large corporates to encourage banks not to take unilateral action, otherwise the customer will skip.” In March 2016, the UBF unveiled a plan — as a prelude to the landmark bankruptcy law which is going to be implemented in the UAE by the first quarter 2017 — which allows for
We have worked out Dh2.5 billion ofloans to large corporates to encourage banks not to take unilateral action, otherwise the customer will skip
Abdul Aziz Al Ghurair, Chairman of the UAE Banks Federation
the temporary suspension and restructuring of debt payments for businesses struggling with loan repayments amid an economic slowdown.
At a media briefing, Al Ghurair, who is also the chief executive officer of Mashreqbank, said the banking sector had slowed down this year and profit would come down anywhere from 10 to 20 per cent.
For 2017, profit of the sector will probably be flat, “plus or minus five per cent” in line with the general slowdown across all economic sectors in the UAE, he said.
He said provisions by banks would peak this year as the industry continues to work with businesses to renegotiate terms instead of calling defaults.
Al Ghurair said the problem with the UAE businesses is that they have been spoilt as they got used to high margins and high returns that are no more sustainable.” The upcoming bankruptcy law will provide greater certainty to creditors and provide a viable legal mechanism to deal with defaulted customers and discourage them from absconding which “traditionally has been hugely problematic” for lenders, he said.
The law gives the trustee the power to apply for a new financing which will be considered a preferential debt over existing unsecured debts of the customer, which will foster an additional lending business environment for banks, Al Ghurair said. > TURN TO PAGE 23