Emirates NBD,
Dubai’s largest bank, is one of a number of local UAE lenders who have hired
British and American debt collection agencies to chase expatriate defaulters
who have absconded back to their home countries without settling their loan repayments.
“In response to
a growing number of fleeing debtors, banks such as Emirates NBD, ADCB [Abu
Dhabi Commercial Bank] and others have been increasing their recovery efforts
by employing international debt collectors and enforcers,” Radha Stirling, a
legal consultant specialising in the Middle East and founder of the
London-based charity Detained in Dubai, told Arabian Business.
Stirling
claimed that some of the third party agencies had begun using “intimidation and
harassment” in order to recover the funds outstanding, including threats to
issue Interpol notices against debtors, as well as harassment and threats of
harm.
She advised
expat debtors being targeted in the UK and US to do background checks on
whether the collection agencies are authorised to use such tactics to recover
debts and whether they are authorised to work on behalf of the banks they claim
to be representing.
“Any third
party claiming to represent a bank, should insist upon receiving confirmation
of representation before entertaining any communication,” Stirling said. “In
our experience, most debtors have acted in good faith and genuinely seek to
reach a manageable resolution. Threats simply cause undue stress and do not
change the situation and the debtor’s ability to pay.”
While Abu Dhabi
Commercial Bank declined to comment, an Emirates NBD official spokesperson
issued the following statement to Arabian Business: “We would like to confirm
that, like other banks, Emirates NBD works with debt collection agencies,
within the legal rules and regulations of the jurisdiction where the bank uses
these agencies”.
Debtors
absconding is an unavoidable reality for all banks, not just those in the UAE,
but in November a senior banking official said lenders in the emirate are
working together to try to stem the number of small business owners fleeing the
country with unpaid debt, a trend which had allegedly reached around AED5
billion ($1.4 billion) by that point.
Small and
medium-sized enterprises (SMEs) have come under pressure amid a gradual drying
up of liquidity in the banking system due to the weak oil price and slowing
economic growth.
As a result,
some business people have chosen to “skip” the country, leaving
behind unpaid debt, a situation that bankers say has grown significantly from
previous years.
“We want
to take coordinated action on risk management,” UAE Banks Federation
chairman Abdul Aziz Al Ghurair said.
“The idea
is to allow the customer to pay for his debt and stay in town if they have a
good intention. If they don’t have a good intention, then it is no good (the
bank) spending time (with them), it doesn’t help.”
Current
bankruptcy rules are considered by lawyers to be outdated and largely untested,
with few struggling companies using the legislation.
The cabinet
approved a draft law in July 2015 but it still needs the support of the Federal
National Council, the country’s legislative body, and the president.
Al Mansouri
also said the UAE would set up a credit guarantee scheme to help reduce the
risk of default for potential lenders. He didn’t elaborate on the specific
details of the plan.
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