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UAE banks facing up to $11bn liquidity shortfall

by This email address is being protected from spam bots, you need Javascript enabled to view it  on Tuesday, 13 October 2009
BAD DEBT: Standard Chartered chief says UAE liquidity shortfall up to $11bn. (Getty Images)

Banks in the UAE are facing a liquidity shortfall of up to $11bn and are suffering from bad debt due to unsecured lending, a Standard Chartered executive said on Tuesday.

Shayne Nelson, the bank's chief executive in the Middle East, told a conference the country's lenders were coping with a liquidity shortfall of AED30-40bn ($8.2-$10.9bn).

"Liquidity is still short. It's AED30-40bn short. (This is) the difference between advances and deposits. Straight math," Nelson said, adding access to capital was improving for the larger banks.

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"Capital markets are opening up for good names to bring in liquidity, bond issues are bringing in liquidity at a faster pace," Nelson told reporters. He said the performance of banks was hurt by an increase in bad debt, in particular as a result of unsecured lending.

Some 13 banks in the UAE have exposure to troubled Saudi groups Saad and Ahmad Hamad Algosaibi & Bros that are restructuring billions of dollars in debt.

Nelson declined comment on whether Standard Chartered would be interested in acquiring a stake in Saudi Hollandi bank.

"But I will say that Saudi is a market that we have been serving out of Bahrain for a long time and it is a market we continue to be interested in," he said. (Reuters)

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