Goodbye good time banks

You are the middle of lunch when she calls. Then in the jacuzzi, when she calls again. While driving home, she calls another three times.

By early evening, she has called six times and you haven't answered once. But she doesn't give up, with one more call at 10.30pm.

And then the next morning, at exactly 8am, it starts again. Every morning, every day and every night, the calls keep coming. She won't take no for an answer. Sometimes you even see her while you are shopping in the mall.

Who is "she"? Well, if you have lived in the UAE for the past three years, you definitely know her: she has called you many times - to offer a loan, a credit card, another loan, a mortgage, a salary transfer. You name it; she wants you to have it.

Until last month, when the effects of the credit crunch began to ripple their way into the Gulf States. Greedy banks, desperate to sell any product to any customer, no matter how huge their inability to pay back, have stopped calling. Now, they won't even answer your calls. Having made considerable fortunes from expats desperately seeking loans over the past few years, the very same banks are now closing their doors.

Many may soon close up shop and head back to where they came from, eager not to have any business interests in this part of the world. They came here to cash in on the good times. Now the bad times have set in, they are storming out of the door like rats on a sinking ship.

Precisely, who is "she"? Who are the worst offenders? Top of the tree must be Lloyds TSB, Middle East. The bank has been in Dubai since 1977, having seen only good times, and even better times. In the past few weeks however, it has stopped offering any mortgages on apartments.

Loans on villas are reduced to a maximum 50 percent of the value of the villa. Worst of all, anyone requiring a personal loan must now earn at least 25,000dhs per month (as opposed to 12,000dhs per month previously).

In other words, the message is "don't bank with us in the UAE - we have nothing for you."

None of this quite sits with the message of their UAE website, which declares to customers "You are with a bank that has enormous strength and solidity and, with that, a never-ending commitment by us to be the bank that is chosen not just for now, time and time again".

Oh really? Frustrated customers looking for a new bank better be careful where they go. HSBC, "the world's local bank" is being anything but local. It has upped the personal loan salary criteria from 10,000dhs per month to 20,000dhs per month.

Again, it prices out a huge proportion of potential new customers. Lloyds TSB, though hit by the credit crunch, still turned in a three billion dirham profit in the first half of 2008.

Ironically, as the likes of Lloyds and HSBC run for the hills, it is the local banks in the region that have held their nerve and shown real commitment to the region.

Take Mashreq, the UAE's biggest private bank. In many ways, given its exposure to the region, it has most to lose. But have you heard a word about scrapping mortgages and loans? Not a squeak.

Mashreq - along with many other local lenders - takes the view that the crunch may be here, but this is precisely the time to stand by its customers.

This is the time to show confidence that the financial markets will recover, and that the worst thing they could do is take it out on customers - costing them their homes, their cars and their lifestyles.

All those billions of dirhams worth of profits made in the past five years can now act as a cushion against the winds of deep recession blowing from the West.

The difference in attitude of Western and Gulf banks during the past month couldn't be more stark. The Western banks, having made their huge profits, are shutting their doors to the very people who helped them build up huge fortunes. More than often, Western banks used heavy selling techniques in their quest for revenues from loans. The fact is they lent money to people who could never afford to pay it back.

Today, many ordinary people - who can afford to pay back loans - can't get them. At least not from the likes of Lloyds and HSBC.

The question of course is, what happens a few months down the line, when it is possible that the markets will have corrected and we may have gone through the worst. What will Lloyds and HSBC do? What will "she" do?

She will of course, call you again. And again, and again. But this time, you should answer the phone - and tell her where to go.

Anil Bhoyrul is the editorial director of ITP Executive Publishing.

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