Bank stops lending to expat staff of real estate firms

by This email address is being protected from spam bots, you need Javascript enabled to view it on Thursday, 13 November 2008

BANK DECISION: Emirates NBD has suspended credit facilities to expat staff at 12 real estate companies. (Getty Images)

Emirates NBD, the largest bank in the UAE by market value, has stopped lending to expat employees of leading real estate companies in the region on fears of further job losses in the sector, it emerged on Thursday.

Arabian Business has obtained a copy of an internal email sent to hundreds of bank staff instructing all its branches and sales departments to suspend credit facility with immediate effect to employees of 12 of the largest property companies in the Gulf including Nakheel and Emaar.

“In view of the current market scenario, it has been decided to suspend retail credit facilities to expatriate employees working with the [below] mentioned employers, due to possible restructuring, lay offs and job loss,” the email read.

“Branches/meSALES are advised not to grant retail facilities to the expatriate employees working with these organizations with immediate effect,” the email added.

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It is understood the move by Emirates NBD will affect hundreds of expat staff working in the real estate industry in the emirate.

The email was sent on Nov 6 by Amal Al Serkal, the head of group retail credit at Emirates NBD.

In the memo, she said the bank would no longer provide credit to staff working at developers Tamweel, Amlak, Damac and its subsidiaries, Emaar, Nakheel, Sama Dubai, Dubai Properties, Union Properties and KM Properties.

Emirates is worried staff employed by these developers could default on their payments if the real estate sector continues to struggle and further job losses are announced.

Already, Dubai-based Damac has announced 200 job cuts while Omniyat Properties has also confirmed cutbacks, thought to be about 60.

And on Thursday, Emaar, the largest developer in the Middle East, said it was also reviewing its recruitment policy in light of the global financial situation.

Roy Cherry, real estate analyst at Dubai-based investment bank Shuaa Capital, said: “This won't send out a good signal and will fuel the negative sentiment on the equity markets.

"The banks are not only extending credit to the employees, they are also funding the companies - so they know very well the funding requirements and shortages of these companies.

“It seems they expect large scale lay-offs. The market sees this as a further indicator that things are snowballing.”