British lender says willing to extend financing to Gulf emirate, state-linked entities
Barclays is willing to extend financing to the debt-laden
Dubai government if required and expects the emirate to support state entities
in meeting their debt obligations this year, the British lender's regional head
John Vitalo said.
His comments come at an important time for Dubai, which has
restructured some $41bn debt in the last two years but which still faces
refinancing risks related to three of its state-linked entities in 2012 amid a
tightening global bank lending environment.
"We have a level of balance sheet to support Dubai Inc
among other clients. We're committed to Dubai and the UAE but every credit
decision has to stand up to its merits," Vitalo, Barclays' chief executive
officer for the Middle East North Africa (MENA) region, said in an interview.
Government-related entities in Dubai have bonds worth $3.8bn
maturing in 2012, according to a Moody's report last month.
Moody's reckons the total debt of the government and related
entities stands at $102bn - amounting to around 125 percent of the emirate's
gross domestic product (GDP).
A chunk of $3.8bn in bonds is due this year from a trio of
state-linked firms seen as having the highest refinancing risk.
"We do expect some Dubai sovereign support for this
debt," Vitalo said.
Barclays, in which Qatar's sovereign fund and the Abu Dhabi
royal family own stakes, expects higher revenue from the Middle East and North
Africa this year, driven by the lender's solid capital position and supported
by the expanding coffers of oil exporting countries, the executive said.
The British lender will focus on investment banking, wealth
management and trade finance in countries such as the United Arab Emirates,
Saudi Arabia, Kuwait, Qatar and Egypt.
"It's a pretty fair spread of revenues from all those
businesses," Vitalo said. "The MENA region is critical to Barclays.
We expect to increase revenues from the region this year ... There are very few
places in the world today that I can ... (readily) write a big check and this
is one of them."
Vitalo did not rule out looking into other countries such as
Iraq and Libya but said the bank did not have any concrete plans to enter those
Vitalo's comments come as several European banks have
unveiled plans to offload assets in the Gulf Arab region as they look to raise
capital and exit non-core businesses.
Royal Bank of Scotland said earlier this week it is in talks
to sell its mergers and acquisitions business in the Middle East, while Lloyds
Banking Group is in talks to dispose its operations in the UAE, sources said
"With the forced deleveraging of the some banks there,
you have unnecessary withdrawal of cross-border lending," Vitalo said.
"But Barclays is in a different boat than those banks and ... many of the
European banks. The bank does not have any UK government ownership. It is rock
solid on capital and liquidity."