UAE banks facing up to $11bn liquidity shortfall

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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.

"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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