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Fri 29 Jan 2010 10:46 AM

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ADCB tops Dubai World creditors’ list - paper

Bank has around AED9bn in outstanding loans to the company.

ADCB tops Dubai World creditors’ list - paper
BIG BANK: The emirate’s third-largest bank by market value. (ITP Images)

Abu Dhabi Commercial Bank (ADCB) has disclosed the biggest exposure yet to Dubai World among local lenders, according to a report.

According to The National daily, the Dubai World conglomerate is seeking to revamp as much as $22bn (AED80.8bn) of debt.

The emirate’s third-largest bank by market value has close to AED9bn in outstanding loans to the company, it added.

ADCB's CEO Alaa Eraiqat told the daily that half of the above loans are supported by collateral and income streams from infrastructure and other projects.

“If I slice it down, the picture looks much better because of the ring-fenced income and collateral of some of these exposures,” he said.

Eraiqat said that close to half of the lending to Dubai World was issued in the form of “club deals”, or syndicated loans involving multiple lenders. But the bank has not yet set aside any provisions for Dubai World, he said.

“The accounts are still performing with us and other creditors. They are still paying interest and [other] payments. It is still current everywhere.”

Mr Eraiqat said the composition of the bank’s exposure to Dubai World made him feel “more comfortable”.

He told The National, “The headline number might be a bit misleading, and I don’t want anyone to say ‘let us assume you take a haircut of 30 per cent, that means you make a AED3bn loss’.” A “haircut” refers to the margin between the true value of a loan and what a lender receives after a restructuring.

“This is what I tell you makes a big difference [and explains] why we feel comfortable here [with our Dubai World exposure].”

Record provisions dragged ADCB’s to a much wider fourth quarter loss than expected, highlighting the scale of the debt crisis among the regional companies to which it is exposed.

The bank posted a fourth quarter loss of $326.7m after booking impairments of $544.5m in the last period alone.

Overall in 2009 it booked provisions of $1.05bn.

State-linked Dubai World's property and investment assets exceeded $120bn at the end of 2009 and could cover its debt of $57bn, an Arabic-language daily said on Sunday.

Citing a recent internal report shared with creditors, Al Ittihad newspaper said the value of the company's property assets dropped around 35 percent in 2009, compared with $157bn in 2008.

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