UAE banks urged not to hike interest rates

RATES WARNING: Abu Dhabi Chamber of Commerce board member Saeed Al-Ka'abi has called on banks not to hike interest rates. (Getty Images)

A leading Abu Dhabi business figure has warned banks in the UAE not to hike interest rates to customers at a time of global financial crisis.
Saeed Al-Ka'abi, member of the board of directors of the Abu Dhabi Chamber of Commerce and Industry (ADCCI) and chairman of Ascorp Holdings, said large increases in interest rates on existing and new loans was "unjustified", news agency WAM reported.

He said: "Dispatching letters recently from the banks to the customers on increment of the interest rates on old and new loans by 7-17 per cent is concocted by the banks to reap narrow interests by emerging from the global financial crisis with lucrative gains at a time all need to join hands to immunise the national economy from potential reverberations of the current global financial crisis."

His comments come just days after Arabian Business revealed that some lenders across the UAE had ramped up the interest rates on home loans.

The likes of Amlak, HSBC and Barclays had increased their rates by a minimum of two percent.

Al-Ka'abi added: "It (the policy of high interest rate increases) is an attempt to create another financial crisis through making use of the current global crunch."

He said that this attempt was in contrary with the measures taken by the banks in other countries, where profit on loans were reduced in the beginning of the global financial crisis to alleviate negative affects on customers.

He urged the central bank and other authorities to prevent any interest hike on existing loan contracts.

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READERS' COMMENTS

Rip Off
Posted by What a joke, Dubai on Tuesday 25 November 2008 at 15:34 UAE time


With economic conditions being what they are it is a joke that the banks are allowed to get away with this. I took my mortgage out with Barclays and was guaranteed the rate of 6.5% for at least 12 months as soon as the papers were signed they lifted the rate to 9.5%. My company are also looking to drop salaries by 35% due to our business being mostly in Europe, on top of the fact that the Euro is worth 20%+ less than it was 2 months ago which is how we are paid!!!!!!!!!When are there going to be proper regulations here on the Finance sector??????

Banks are thinking short term
Posted by Susan Valerian, dubai on Monday 24 November 2008 at 15:36 UAE time


I hope the Central Bank bans banks and mortgage houses like Tamweel and Amlak from increasing interest rates at a time when the rest of the world is decreasing its interest rates. These companies are thinking short term. Already, people see a lot of job uncertainties ahead of them. It would be easy for those of us who've only just started paying to seek a foreclosure. If all lay people started to do that, these companies and banks would also have a lot of houses on their hands that they would not be able to sell. It would have the kind of effect it had in the US. At this time, banks need to help people at least by not increasing interest rates. If you bang on about this long enough, one or the other minister will take notice and bring it to the attention of the Cabinet.

Increase in interest rates?
Posted by George Mathew, Dubai, UAE on Monday 24 November 2008 at 09:19 UAE time


This is really an unfair plan by the banks and the Government must take all steps to curb it. It is very clear that the UAE Banks are not affected by the credit crunch and anything like this is just inviting trouble to the whole economy of the country.

Mistake
Posted by Jeremey Morahan, Dubai on Monday 24 November 2008 at 08:28 UAE time


We recently received a letter from our bank (ADCB) stating that our mortgage interest rate had increased. We had been assured when taking the mortgage that the interest levels would stay at the same level above the EIBOR rate. In hindsight I guess I shouldn't have trusted the bank.

Most banks in other countries in the world are dropping their interest rates in line with central bank rates. But I guess the lack of accountability and regulation here means banks can collude together and hike rates to their own benefit. I won't be making the mistake of buying property here again. And I will be telling anyone else I know not to make the same mistake either....

Things like this will push the property market rapidly south and it'll bring the rest of the economy with it....

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