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Fri 27 Nov 2009 10:03 AM

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ADCB may be owed $1.9bn by Dubai World - report

Third-largest lender in UAE refuses to comment on specifics of its talks with DW.

Abu Dhabi Commercial Bank

may be owed $1.9 billion by Dubai World, making it the largest creditor outside the emirate to the state company seeking to reschedule debt, said two people familiar with the companies.

“We are in touch with Dubai World, and we have been in discussions more than once today and yesterday,” Ala’a Eraiqat, the chief executive officer of the third-largest lender in the UAE, told Bloomberg in a telephone interview. He declined to comment on specifics. “We have a lot of assurances which is a good thing.”

Dubai World, controlled borrowed from more than 70 lenders to buy assets ranging from stakes in Las Vegas casino company MGM Mirage to London-traded bank Standard Chartered through Istithmar. The request for a postponement includes $3.52 billion of bonds due Dec. 14 from property unit Nakheel PJSC.

Dubai borrowed $80 billion in a four-year construction boom that transformed the sheikhdom into a regional tourism and financial hub. It suffered the world’s steepest property slump in the global recession, with home prices dropping 50 percent from their 2008 peak, according to Deutsche Bank AG.

“We understand the concerns of the market and the creditors in particular,” Sheikh Ahmed Bin Saeed Al-Maktoum, who chairs the Supreme Fiscal Committee in charge of apportioning financial support to ailing companies, said on Thursday in the first statement from the government since it announced the debt rescheduling. “However, we have had to intervene because of the need to take decisive action to address its particular debt burden.”

Dubai World had $59.3 billion in liabilities and $99.6 billion in assets at the end of 2008, subsidiary Nakheel Development Ltd. said in an August statement. Dubai has a total $4.3 billion of government and corporate debt due next month and $4.9 billion in 2010’s first quarter, Deutsche Bank data show.

Dubai World’s biggest creditors are
Abu Dhabi Commercial

and Dubai-based
Emirates NBD

, the UAE’s biggest lender by assets, according to two people familiar with the situation who declined to be identified because the information isn’t publicly available.

The debt owed to
Abu Dhabi Commercial

adds to problem loans from Saad Group and Ahmad Hamad Algosaibi & Bros Co., the Saudi Arabian family companies that defaulted earlier this year. Abu Dhabi Commercial fell 31 percent from Sept. 17 to Nov. 1 after the bank said it was owed a total $610 million by the two companies. The stock has risen 22 percent this month. It didn’t trade on Thursday during the Eid Al-Adha religious holiday.

South Korean financial companies had a combined $32 million in loans and investments associated with Dubai World and its property unit Nakheel at the end of September, according to the country’s financial regulator.

Korean financial companies hold $221 million in loans and securities holdings in the United Arab Emirates with $88 million exposure to Dubai, the Financial Supervisory Service said in an e-mailed statement late on Thursday.



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