Bank raises expat salary limit for loans by 200%

Posted by: Dan Thursday, 15 January 2009 6:06 PM[UAE] - Sweden

This makes sense. Most of the economy was based on real estate and it went bust. Most people used to work in real estate or businesses supporting real estate. They know it will not recover for a long time and a lot of people will lose their jobs. This limit is just for show. No matter how much your salary, you will not get a loan. We all know the reality, so we should not be surprised. Would you give loans in these circumstances? Especially when the banks don?t have a dirham?

Posted by: ABC Thursday, 15 January 2009 4:32 PM[UAE]

Just today I had ADCB calling me to offer me an amazing deal.. :) tie up my savings with them for 6 to 12 months and get 6 or 7% returns (subject to change at banks discretion(obviously only downwards then)) Only a short while ago before the bubble burst and they were over leveraged on real estate deals, they turned me down for a car loan of 100k on the basis that my FZE company was 11 months old not 12 months old, all this despite having 100k in a 12 month fixed term deposit and more than 200k in other accounts... needless to say I closed business, staff and a couple of personal accounts with them over the issue (they lost 5 accounts in total leaving only one current account standing) Now they are crying out for deposits so they can lend/recover bad debts... what a shame the loans system wasn't based on credit history/customer profile rather than the standard 6 month salary transfers.. I for one will loose no sleep over their new dilema

Posted by: Malik Thursday, 15 January 2009 2:48 PM[UAE] - KSA

I thik by doing this they are going to kill the real state market which represent a new important economic sector for UAE. This is will make it more difficult/impossible for the end users to purchase a home. My mortage provider Amalk increased my interest rate starting Jan 2009f rom 7.75% to 9.75% (imagine 2% increase) while the interest rate are decreasing around the world.

Posted by: stuart mayhead Thursday, 15 January 2009 2:44 PM[UAE] - UAE

What we have now all learnt is that the banks actually went bust and were kept afloat by the initial Government loans. The banks then prioritised their own balance sheets and have set about securing their own commercial future. Part of this future will be achieved by reducing the risks that they take. Only once they feel that they are on safer ground will they start to lend in large amounts again. The UK Government has realised that they need to 'cover the risk' for the banks and have offered to guarantee the loans. Hopefully this will enable the banks to increase their exposure and lend more money. However what is important here is that we are in new territory and we are all learning as we go. Let?s hope we get it right!

Posted by: TurkishGuy Thursday, 15 January 2009 1:25 PM[UAE] - UAE

What is the sense in not giving out loans to people who earn a steady income but less than 25000? Does it mean that if someone is making 25000 thousand or above his job is completely secure and he will never be a defaulter? The amount of loan should be a percentage of the annual income of a person. Therefore, any salaried person should be eligible for a loan but the amount should depend on their income. If you rule out anyone below 25000, you will wiping out a huge percentage of your potential customers. At a time when the economy requires stimulus, and financial institutions are given low-cost credit lines from the government, these steps cannot be the decisions of a wise-mind. These are decisions taken without ind epth thinking about their consequences both in short and long term with a panic state of mind. Increasing the interest rates, making it more difficult to borrow will definitely halt an economy that is already slowing down dramatically. If you want to stimulate the economy, encourage people to spend, you should give them the means.