Emirates NBD reaches real estate exposure limit

By Arabian Business staff writer
  • Thursday, 13 November 2008 1:34 AM
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Emirates NBD may guarantee capital that investors lend to Dubai developers as the UAE's biggest bank reached the limit it can provide to property companies, a senior official said on Wednesday.

"The idea is to increase your exposure and help stabilize a market that you are already invested in, reaping the benefit when the marketrecovers," Michael Preiss, Emirates NBD's chief investment officer, told newswire Bloomberg.

"It is our responsibility as the biggest bank in Dubai to keep up the umbrella when it is raining."

Dubai residential property prices fell 4 percent in September, while in Abu Dhabi they declined 5 percent, HSBC said in a report on Wednesday.

"Extending credit during a credit crunch is a role our shareholders believe the bank should play," Preiss, the top investment official at theDubai state-controlled bank, said.

He declined to say what percentage of its total exposure the bank is allowed to have to the real-estate industry, Bloomberg added.

Bahrain's central bank has proposed a 30 percent limit on bank's sectoral exposure to real estate debt.

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Posted by: Paul Thursday, 13 November 2008 8:54 AM[UAE] - UAE

It is no wonder Dubai and UAE bank stocks are crashing. They won't say what their exposure is, or even what the limit of their exposure to real estate is. So much for transparency. But worse, they propose openly circumventing rules on real estate exposure by simply guaranteeing others to lend cash on real estate. And the regulator will let them? If this goes ahead, investors will rightly view the regulations as a total sham and I would expect banking shares in the UAE to plummet all the way to zero as anyone with any financial sense runs away from a market that is clearly bent on propping up a bubble rather than delivering value and limiting losses for its shareholders.

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