Dubai bank CEO says time ripe for buyouts

BUYING OPPORTUNITIES: Mashreq bank head says time to buy as UAE may have passed through worst of global economic crisis. (ITP Images)

The UAE may have passed through the worst of the global financial crisis and now is a good time to make acquisitions, the head of Mashreq bank said on Saturday.

"I feel we have reached the bottom and the worst is behind us," Mashreq Chief Executive Abdul Aziz Al-Ghurair told reporters on the sidelines of the World Economic Forum in Jordan. "How long this will last we still don't know, but at least we have stabilised."

The Dubai-based bank, which in April started retail operations in Egypt with 10 branches with a capital outlay of 560 million pounds ($99.4 million), had put acquisitions on the "backburner" for the last six months to focus on its existing business, he said.

"It has never been a better time for any acquisition ... this is the time to do an acquisition because valuations have come down quite dramatically," Ghurair said, adding the bank had no immediate plans for buyouts.

Mashreq posted a 4 percent rise in first-quarter profit this month but raised provisions to help it weather the financial crisis. In February, it said it had laid off 4 percent of its workforce.

Ghurair said measures taken by the government and central bank to improve banking sector liquidity, including 120 billion dirhams ($32.67 billion) in funding facilities, had been "good" and he was "optimistic" further assistance would come as needed.

The bank would look to expand by opening new branches and was working on developing its business in Kuwait, said Ghurair, also speaker for the advisory Federal National Council.

He said governments seeking to maximise their returns could be reluctant to sell stakes in banks or other assets in the current climate.

"I don't know if people are serious to sell at this price... I'm not sure governments are ready to accept the new reality," Ghurair said.

Ghurair said the Gulf region's banking sector had performed well relative to the rest of the world. Most banks in the region have had minimal exposure to toxic assets in the West although they are facing pressures from the Dubai property slump.

Mashreq's 2008 profit fell 13.7 percent to 1.64 billion dirhams.

"If we maintain the same performance as last year then it's a great success ... we should not be over optimistic it's a reality," he said, adding the bank had not yet faced late payment on home loans.

"If this is an indication of the state of the industry and mortgage business in the UAE it is very good news, but I wonder if it is sustainable," he said. (Reuters)

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