Jailing debtors in the UAE remains an effective way for banks to retrieve bad loans, the head of HSBC for the country Abdulfattah Sharaf has told Arabian Business.
“It has worked for us. People immediately get people to come and bail them out, and get the money in… (historically) it did work. In most cases it did work,” he said in an interview.
Sharaf added that in situations where the money could not be retrieved, however, it was frustrating to see debtors languishing in jail.
“There has been a reduction in people running away from debt; in 2010 it has tremendously reduced. Yes, the restriction [jail] is good, when you can get your money back. But if you can’t get anything back, how am I going to benefit from people being in prison?” he said.
Sharaf said HSBC, which last year loaned $14bn to customers in the UAE, was looking to work with people facing newly straitened circumstances who owed the bank money.
“I won’t let you [leave the country]. If you have a job and prove to me that you have an income and you can do some repayment and there is a way of working it out, then yes, I can work it out with you,” he said.
“If I send you to prison, what do I get? We have faced lots of clients who come to us – they have a mortgage, they have lots of problems on their payments. We have delayed their payments, we have given them (payment) holidays, we have said ok, find yourself a job, come back in two months or three months, and they have kept in touch,” he added.
“Honestly, I like HSBC clients, because they are quality clients. Very rarely you find people who come and take the money and then run away… If you have a problem, I am going to help you,” he said.
Last year, HSBC Middle East saw its profits fall from $1.7bn in 2008 to $455m. The bank will shortly announce its results for H1, 2010.
Follow us on
